Increasing Returns: The Dwindling of DVD to VOD
One powerful force that can drive the
emergence of technologies is the concept of
“increasing returns.” The concept of “Increasing returns” is coined
from a branch of mathematics called Chaos and Complexity Theory (Laureate
Education, 2014e). David Thornburg (Laureate Education, 2014e) describes the “increasing
return” model as two innovations hitting the market at the same time in which
one of the technologies will get locked in and drives the other to extinction.
The current competition between DVD’s and
video on-demand (VOD) are current examples of the force of “increasing returns.”
It is more apparent now than before that the DVD-to-VOD window has reduced.The release dates of the DVD’s and the
availability of VOD has had a tremendous widow collapse within recent years.
Before it was typical to see at least a 30 day gap between the release of VOD
from DVD’s. It is now common to see many films released on VOD the same day as
DVD’s.
One reason I believe this window has
started to close is due to the ease of accessibility to film through cable
networks, such as Xfinity, and internet based providers such as Netflix.
Consumers have shown less interest in purchasing physical media with the option
now available online as well as cable networks.
Richard Greenfield, a BTIG analyst, explains
that Hollywood studios have begun to show more interest in protecting rental
economics from services such as Netflix and Redbox than protecting DVD sales
().The dwindling interest in the purchase of DVD’s has supported the increasing
economics of VOD rentals.
In regards to McLuhan’s tetradic model, DVD’s
are befitting to dwell within the second quadrant as they are becoming obsolete
by VOD. VOD enhances consumer’s accessibility
in the comfort of their own homes as well as increasing access through various
mobile devices. Although DVD sales have
not completely plummeted, it makes sense that VOD will continue to be a prominent
choice to consumers.
References:
Laureate Education (Producer). (2014e). David Thornburg: Increasing returns [Video file]. Baltimore, MD: Author.
Laureate Education (Producer). (2014g). David Thornburg: Red queens [Video file]. Baltimore, MD: Author.
Lawler, R. (2010, August 20). Studios giving up on DVD, pushing VOD instead.
Retrieved from https://gigaom.com/2010/08/20/studios-giving-up-on-dvd-pushing-vod-instead/
Great post. I think that Korea could be an example of one reason why studios support VOD over DVDs. In Korea, the bootleg market was very high in Korea a few years ago. You could find people selling bootleg DVDs at subway entrances, on street corners and even in street front stores. It was obvious. Now, I do not see them around as much, and do not see DVD players (or DVDs) for sale in retail stores anymore. It is harder to bootleg VOD since it is all running through the cable systems, and internet vendors.
ReplyDeleteThanks for getting me thinking.
Charles
What's interesting is that the whole net neutrality debate is not really about tiered internet pricing, but content. Because of Moore's Law, the cost of some internet networking technology is dropping thus it is becoming cheaper to provide parts of the infrastructure. According to Nielsen (1998), only 10% of uses want high bandwidth connections. The average user is slow to pay for more speed they don't think they need. The problem for the Internet Service Providers (ISP) is that there is no real money in providing internet service, not like owning content because of copyright and royalty structures. The ISPs want to make money on the level of the content providers. If they control or own content like Comcast who bought NBC they can get revenue from the content and make money by making you pay extra for the bandwidth to view it.
ReplyDeleteReferences
FCC. (2015). Chairman Wheeler Proposes New Rules for Protecting the Open Internet |. Retrieved from http://www.fcc.gov/document/chairman-wheeler-proposes-new-rules-protecting-open-internet
Nielsn, J. (1998). Nielsen’s Law of Internet Bandwidth. Retrieved February 08, 2015, from http://www.nngroup.com/articles/law-of-bandwidth/
Takahashi, D. (2012). 10 predictions about networking and Moore’s Law from Andy Bechtolsheim. Retrieved from http://venturebeat.com/2012/10/11/bechtolsheims-10-predictions-about-networking-and-moores-law/