Video on demand no threat for the inexpensive DVD movie

April 25, 2005

Here is some interesting insight from Bill Fischer of DVD Stations.
Mr. Fischer is the Vice President of Corporate Development for the company that
has a blog and also a company website that is rather interesting to explore. I have never
heard of them as they are not in my area yet as far as I know. But
here is a blurb from their site: DVD Station was founded in 2001 with the belief
that there was a better way to rent and buy your favorite movies and TV
shows. Today, that dream is a reality for the thousands of customers who
frequent a DVD Station location convenient to where they live, work and
play. Using patent-pending touch screen displays, customers can browse
thousands of films in different categories '“ by movie genre, actor, or director
'“ and then rent DVDs for as little as $1 per day '“ consistently the lowest price
in town.

Anyway, here is what he had to say about
Video on Demand when compared to DVD rentals and sales and why he thinks
that the DVD is here to stay. Obviously, he has a very particular viewpoint, but
it makes sense.

Although, we agree the value proposition of VOD and
especially HDVOD is undeniably compelling (in the long run it seems that
is must win), here are some quick thoughts on why we're still bullish on
packaged media:

A typical Blockbuster distributes 16 terabytes of data a week via DVD.
Granted the standard DVD format is based upon an old codec and can be
compressed nearly 6-fold with nominal degradation in quality, but the
HDDVD formats will be built with better codecs and will carry 3 to 9 times
the data. With 8,000 locations, Blockbuster will be moving many petabytes
of data weekly. Consumers may trade viewing quality and viewing selection
for convenience but bandwidth costs alone (even with P2P)shouldn't be
overlooked, Reed Hastings could probably provide a perspective on the
bandwidth costs for them to replicate their service via VOD vs. their
sneakernet. Simple server storage for the data contained on 30,000 films
would cost millions annually whereas one could store 30,000 DVDs in a
small unrefrigerated closet.

This is an interesting take on the
situation, we have to wonder if he is right, will HDVideo on Demand be a
success. But for right now, the inexpensive DVD is a very attractive
distribution model when compared to using the
Internet.

Source: eHomeUpgrade