by: Tom Yadron

Video viewing on sites like Hulu, Netflix, and Amazon will beat out physical video this year.

According to a study released on March 23rd by IHS Screen Digest, online video will surpass physical video in viewing volume this year. This transition marks a major turning point in the way people approach video consumption in the U.S. “We are looking at the beginning of the end of the age of movies on physical media like DVD and Blu-ray,” said Dan Cryan, IHS Senior Principle Analyst, Broadband & Digital Media.

Online video views will double to 3.4 billion this year while physical viewings will decrease from 2.6 billion to 2.4 billion, according to IHS. 

A complete transfer to solely internet-based viewing will not come quickly however, Cryan emphasizes. He notes that even after the advent of iTunes nine years ago, CD sales continue today.

While online (video watched legally online through pay per view or subscription) will beat out physical (individually purchased video’s on DVD, Blu-Ray, VHS) in number of views, physical video will continue to win out in total sales and hours watched through the near future. In fact, consumers pay 51 cents on average for films online while they pay $4.72 for DVDs. This has encouraged some media companies to continue to push for a cloud-based platform where viewers can upload their collection of videos to a cloud for future viewing.

Some companies are turning towards a cloud-based platform to accommodate consumers who purchase video.

On March 13th, for example, 20th Century Fox, Paramount Pictures, Sony Pictures, Universal Studios and Warner Bros. agreed to a deal with Wal-Mart that will allow their customers to store digital copies of their video’s in a cloud. With this approach, studios can take advantage of the increasing preference towards on-demand consumption while still benefiting from the dominant sales of physical video.

The shift in video consumption habits goes hand in hand with the increasing presence of advertisers online. Online video steaming gives advertisers a better chance to reach consumers, as they will have to maneuver their way through websites to reach their desired video. Watching a DVD at home is more of an isolated experience. So, lucky for us, this monumental shift is good news for advertisers looking for a chance to grab consumer attention.

Sources: 

[1]http://www.mediapost.com/publications/article/170863/end-of-an-age-netflix-hulu-amazon-will-beat-phy.html

[2]http://adage.com/article/mediaworks/online-film-viewing-u-s-top-discs-2012/233640/

[3] http://thecelebritycafe.com/feature/2012/03/wal-mart-agrees-exclusive-deal-studios-disc-digital-service

[4]http://86news.info/wp-content/uploads/2011/06/Apple-Cloud.png

[5]http://1.bp.blogspot.com/-Y-lQsZmntS0/TvwDX0TRhbI/AAAAAAAADmc/9q_Yix-qCO0/s1600/amazon-video-on-demand-logo-2.jpg

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Written by Ad Buzz

The American Advertising Federation Illinois Chapter brings to you Ad Buzz, a blog dedicated to all things advertising related, from our favorite campaigns to trends going on in the industry.

1 comment

  1. I haven’t bought a DVD in over a year but I attribute this to the fact that DISH has taken the initiative of making all forms of entertainment available to me through them. I can stream plenty of movies from their DISHonline site and since late last year, they expanded the number of titles available to me online. Their Blockbuster @Home service is $10 a month on my DISH bill, it gives me thousands of titles to stream on an unlimited basis, and I can rent DVDs and Blu-rays by mail. Since I can stream a movie a lot quicker than getting a disc, I can certainly foresee that online is where movies are going. I’ve loved movies since I was a little girl and I now work in the TV industry for DISH, so it’s no surprise that I’m excited to see what the future holds for cinematic content. I can’t wait to see what people’s reactions will be fifty years from now in a Cloud-world when I say that I had a VCR/DVD player combo back in my day!

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