Module 5 Blog: Red Queens

I will be honest.  I am not really a movie watcher.  I honestly can’t recall the exact time I was last in a theater (I want to say Chipmunks with my daughter).  When choosing movies, sometimes it is last minute.  I honestly do not want to be bothered with running to a rental store.  Besides, are they even around anymore?!

For my video project, I chose Amazon’s new VOD service.  Because I have Prime, the service makes sense for me.  The limitation, though, is that Amazon’s VOD service is not MAC friendly, so no iPad watching.  Because I work on a larger screen, the picture was great.  I will admit that for the iPad, we use NetFlix.  My daughter can easily navigate the site on the iPad for kids movies (she is five).  It’s also an easy service as long as you have WiFi.  The great thing about NetFlix is the choice.  Amazon VOD and Hulu have not quite met the sheer volume NetFlix has.

I digress though.  VOD versus DVD.  VOD = Video on Demand and DVD = Digital Movie Disk.

According to the Smart Advantage blog, DVDs have traditionally been the moneymaker for Hollywood because they are so cheap to make.  In fact, “Industrywide DVD revenues fell 15% during 2010, with overall home entertainment revenues down by 3.8%” (Smart Advantaage, n.d.).  This is significant.  To get a piece of the market share, studios and companies that sell DVDs have to rethink how they market and give access to movies.  I think one of the reasons NetFLix, Amazon VOD, and Hulu are so popular is they are cheaper, give easier access, and meet customers’ needs on customers’ terms.  For instance, if I want a VOD, I log on to Amazon or Netflix and browse through my account for the movie.  Because I subscribe to NetFlix, the movie is “free” if it is available on VOD (some are not). Likewise, some Amazon VODs are free while I can rent others from ninety-nine centers to $5.99 or more.  DVDs (yes you own them) are anywhere from $5.99 to $25.99.  The catch is you have to wait on release dates.

Release date is the key here.  Szalai (2010) quoted media analyst Richard Greenfield as noting that the new industry standard, based on VOD, is narrowing from 30-45 days  to less than a week.  In order to compete with VOD, DVDs have to be made available earlier.  This is significant because the competition is changing industry standards.

According to Thornburg (2009), Red Queens occur when “huge competition between two technologies, in the process, all other competitors are left behind.”  This is the situation with VOD and DVD.  The competition between the two will eventually (in my opinion) lead to increasing returns: “two innovations hit the market at about the same time.  By chance, one technology gets locked in and drives the other to extinction” (Thornburg, 2009).  In the case of VOD and DVD, DVD has been around longer; however, eventually because of market economics, VOD will eventually drive DVDs to extinction.  Like cell phones replacing telephone landlines, I see the potential for the cheaper, more accessible VOD replacing DVDs.

References

Smart Advantage.  (n.d.).  Don’t Wait to Compete – A Lesson from Hollywood vs. VOD.  Smart Advantage Blog.  Retrieved from http://blog.smartadvantage.com/competitive-advantage-blog/bid/54085/Don-t-Wait-to-Compete-A-Lesson-from-Hollywood-vs-VOD

Szalai, G. (2010).  Period between DVD and Video on Demand Shrinks.  Rueters US Edition.  Retrieved from http://www.reuters.com/article/2010/08/20/us-dvd-idUSTRE67J40920100820

Thornburg, D. (2009). Emerging and future technology: Increasing Returns.  [Video Vodcast]. Baltimore, MD: Laureate Education, Inc.

Thornburg, D. D. (2009). Red Queens. [Video Vodcast]. Baltimore, MD: Laureate Education, Inc.