Netflix promises to maintain DVD service, with an eye toward rural customers and film collectors.
The concern for cable TV companies is that streaming video services will eventually replace the conventional system that ties consumers to cable and satellite TV services.
But there is another business that streaming video services is replacing, and that is the movie disc known as a DVD.
A report by PricewaterhouseCoopers shows that revenue from downloading and streaming videos will increase by 13 percent to $9.5 billion in 2015. At the same time, sales of DVDs will drop to $7.8 billion, marking the first year that streaming and downloading services will raise more revenue than the physical disc sales.
The report added that streaming will jump to a $12 billion industry by 2017, and at that point it will raise more revenue than movie theaters will.
Netflix, one of the nation’s top services in streaming video content, had an increase of 24 percent in revenue in its last reported quarter, and its worldwide subscriber list grew to 60 million.
The study says global streaming revenues will double between 2014 and 2019, reaching $30 billion as streaming video is now reaching previously unreachable markets. At the same time, home video markets, which include DVD sales and retailers, will drop to $22 billion by 2019.
When Netflix held its meeting with shareholders last year, little time was spent discussing DVD sales and rentals, but the company still plans to support DVD distribution for the time being.
“It’s going to continue to decline, we don’t have any illusions on that,’’ Chief Financial Officer David Wells told Bloomberg News. “But we think that for a lot of people in rural areas, and cinephiles, the DVD makes sense for them.”
A key to all of these numbers is making China a viable market for streaming, as well as for movies that are presented in theaters. While the Chinese market is considered ripe for video services, the country still has censorship laws that would reduce viability, and piracy is also a big issue in that country.
Helping to produce this change in video revenues is the advent of smartphones. The report said there will be almost 4 billion smartphones able to access streaming video by 2019.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.