How Long Till DVDs Are Replaced By VOD?
 

How long will DVDs be as big as they are? According to the VSDA, they are about a $24 billion U.S. market...$16 billion in sales, 8 billion in rentals.

Nobody knows how big the porn industry is. With few exceptions, such as Playboy and Private, porn companies are privately held and its owners have little incentive to reveal accurate financial information to the public.

The best we can do is compare and contrast the various estimates.

The porn industry (through its trade magazine Adult Video News) tends to inflate its size because that makes porn seem more powerful and respectable. Conservative critics of porn usually want to lowball the size of the industry to make it appear more marginal.

When AVN estimates U.S. DVD sales and rentals for 2005 at $4.28 billion, there is no way that that figure is an underestimate (because it would be against porn?s interest to underestimate its size and AVN is the spokesman for porn). When AVN notes that that sales and rental figure has been flat since 1996, there is no way that AVN is underestimating.

When AVN (and the U.S.?s largest porn distributor IVD) said there were almost 13,600 new releases in 2005, there is no way they are underestimating. There have been about over 10,000 new porn titles released annually (according to AVN and IVD) since 1999.

AVN estimates $1.006 billion in wholesale porn VHS and DVD sales in 2005. Since 1996, AVN has estimated wholesale porn DVD and VHS sales at no less than $800 million.

The Video Software Dealers Association (VSDA) is the trade group for American DVD/Video/software dealers. Again, their incentive is to make their industry look as powerful as possible. There?s no way they are underestimating their industry?s size.

VSDA estimates U.S. DVD/video sales and rentals at $24.3 billion for 2005. That?s up from the VSDA?s $20 billion estimate for 2000.

The same VSDA placed Adult DVD sales at 2% of DVD releases. If that two percent figure carried through exactly, that would make porn DVD sales and rentals a 486 million dollar business for 2005. According to the VSDA, there are approximately twice as many dollars spent on sales as rentals. If this ratio holds for porn, DVD/video sales would amount to $324 million for 2005.

According to the VSDA Annual Report 2005, DVD comprises over 90% of the home video market. According to the Digital Entertainment Group (quoted in the June 8, 2006 issue of DVD News), the DVD format will be 99% of the business in 2006 with VHS making up 1% of the market.


Tom Adams of Adams Media Research told Dan Ackman of Forbes (article published May 25, 2001) that porn, at most, accounted for 10% of total DVD/video sales and rentals. Tom Adams said his $1.8 billion estimate of aggregate porn sales and rentals for 2000 was ?generous.?

The 10% estimate would place porn sales and rentals for U.S. DVD and video in 2005 at $2.43. According to the VSDA, there are approximately twice as many dollars spent on sales as rentals. If this ratio holds for porn, DVD/video sales would amount to $1.6 billion in 2005. I have not spoken to a major pornographer (or read a quote by one) that claims that VHS accounts for any more than 20% of sales. This would peg DVD porn sales in the U.S. for 2005 at approximately $1.3 billion.

Here?s another way of looking at DVD sales:

If there were 13,600 releases in 2005, the highest possible average (median) number of units sold per title would be 1,000 and the median price would be about $10 each, which would make for total DVD sales for 2005 releases at $136 million.

According to experienced distributors, sales in dollars for new titles the calendar year they are released are about half of those for catalogue (older titles). So the combined DVD sales of new titles ($136 million) and catalogue ($272) would equal $408 million for 2005.

A leading porn distributor told me that the six biggest porn production companies (in order: Evil Angel ($20 million), Vivid ($20 million), Zero Tolerance ($18 million), Red Light District, Anabolic/Diabolic, Adam & Eve) would sell no more than $100 million wholesale a year worldwide. That would equate to about $300 million in retail sales and rentals.

With about 400 porn production companies in the U.S., I?d estimate the share of the top six at 15%.

However you slice it, porn DVD sales per annum are no more than $1.3 billion in the U.S.

The days of easy money for any side of the adult industry are over. I think the DVD companies are going to have to exploit the internet and really learn how to profit from it in order to continue to turn decent profits. But even then, the internet is getting more difficult day by day it seems.

I picture dvds being replaced with much smaller storage.. dime-size perhaps..
But the companies will probably lean more heavily in the vod/download direction before long..

as soon as people stop sending thousands of dollars on home entertainment centers.

or when a set top box comes out thats good

Id say that Greg hit the nail on the head when he was answering in the interview - in 5 years there wont be a DVD being produced by the majors - and most of them will be gone with the mergers or just out of biz.

The change has already begun (albeit subtely)...

You can say what you want about Luke Ford but I have yet to see him start a thread that wasn't relevant in a business kind of way.

DVD's aren't going anywhere. IPTV is going to take a chunk out of DVD sales but at the same time it will increase the money to these studios overall as it takes the standard web middlemen (webmasters/marketers) out of the equation a bit more while it makes it easier to get money directly from the consumer.

mini disk for music - didnt work and i dont seeing it working for dvd

It's already started but it will never replace them.. if anything bluedisc will replace dvds... for some reason people love to hold shit.

You said the key word: EXPLOIT. What companies need to do in general with their products is exploit. Take paysite XYZ that creates their own exclusive content. Great, now I just spent buckets of cash in my own content that I have used for paysites and it has generated money. Now, one to two years down the road one must begin to think, how do I make more money off of this?

Exclusive Content should go in this order:
--Paysites
--DVD's
--VOD's
--and possible leased feed content

The reason the feed content is only "possible" is because of the cost it takes to create the backend for it. However, once launched is probably the most profitable.

VOD will take over DVD's but only because DVD's gave us the ground to start on. VHS was once taken over by DVD's, mp3's with CD's ... it's inevitable.

However, DVD's will still remain strong with the older crowd as I'm sure some still prefer VHS. As we grow into a more technological age, the VOD will overcome.