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Technological Transition: From the Humble Video to Digital Downloads

VHS cassette

I can recall a time, around ten or so years ago when there were two independent film rental shops in the small village where I live. Nowadays I have to travel at least half an hour to another town before I come across a recently rescued Blockbuster. Thanks to Gordon Brothers Europe, who bought the company after it suffered massive losses and was forced into administration in January, one of my three local Blockbusters has survived. It has struck me that technological developments in recent years have caused a lot of damage to physical film consumption. Sky News stated that “Blockbuster had struggled to adapt to the changing market amid rivalry from internet retailers including Netflix, Amazon’s LoveFilm and iTunes, which now offers a movie rental service.” In retrospect, at the time the two aforementioned rental shops were still trading, they were already feeling the pinch and struggling to compete with new forms of technology.

The first closure of one of the rental shops saw 11 year old me quite overjoyed to purchase a video of Godzilla for £1, yet 21 year old me realises that DVDs were forcing this shop out of business, as it rented out VHS. At the time new releases on DVD were exceptionally expensive. Most people did still use VHS but the transition of video to DVD was quick and soon VHS became obsolete. The second rental shop smoothed over this transition and stocked reasonably priced DVDs, even those that were new releases, and the owner also gave you free popcorn! However after a while of trading we noticed why this shop offered such cheap rentals, the owner was happy to ignore the bold banner on the case of DVDs that says ‘NOT FOR RENTAL’ and shortly after his shop closed down. Then there was just the public library to rent DVDs from and if you weren’t after a fitness DVD then I’m afraid you were out of luck. Since this time technology has boomed, with new inventions creating ease of access and consumption.

Since 2000 there have been so many technological advancements, that it would now be difficult to imagine life without them. The iPod came along in 2001, increasing in sales year after year, with over 350 Million being sold by September 2012. Then the iPhone was released in 2007, now in its 5th Generation it is statistically the UK’s most popular phone this week according to uSwitch. The noughties also saw the release of the camera phone, iTunes and the invention of YouTube. Of course we’re discussing film and how technology has changed consumption for better or for worse, and so let me delve into the world of on demand film and television.

LoveFilm, owned by Amazon, was founded in 2003 and is considered to be the leading online DVD rental and streaming company in Europe and the UK. In 2009 they began their online streaming service and still operate their postal service. Not only does LoveFilm compete with the sales of DVDs and Blu-Ray but it competes with other similar services such as Netflix. It is strikingly evident that these online services are causing the dwindling sales of physical copies of films. Which? state that “The DVD market is in terminal decline. Since the introduction of Blu-ray and the rising popularity of digital video streaming, DVD player sales have been on the decline. Few new release films or TV programmes are released on DVD.” The increased ease of film watching has developed to the extent that we don’t even need to leave the house now to watch a new film, and we all resemble people with technology induced agoraphobia.

I recently studied distribution and exhibition and found many reasons why technology developing has caused suffering in these sectors. Exhibition is dynamic and ever-changing, facing difficulties in trying to maintain audience consumption, and of course distributors face the same challenges because there’s less market for film in physical form. Piracy has been an issue for filmmakers for years, seriously damaging revenue, last year The Washington Post reported that “the Motion Picture Association of America estimates that piracy costs the U.S. movie industry some $20.5 billion per year.” That only accounts for the US industry so worldwide the issue is very serious. Now almost as big an issue for cinemas as piracy, is legal downloading.

Increased availability is obviously wonderful for audiences, providing they are aware of how to Google and more importantly, own a computer. There are endless ways to consume film now however the multitude of On Demand services across digital media platforms have caused people to stop attending cinemas as regularly, because new releases are widely available online. The BBC reported a significant decline in UK cinema attendances from 2007-2011, dipping from 66.53 million in 2007 to as low as 62.03 million during the period. The fact that online consumption has become a norm has also resulted in less interest in physical copies of film, meaning companies like Netflix don’t operate a DVD postal service, unless you live in the US, again deterring the technophobes among us.

For tech savvy audiences everything is fine and dandy, one subscription to LoveFilm, Netflix, SkyGo or Virgin Media, and you could host a film night, instead of ten people going to the cinema and each paying the extortionate ticket prices. Well can we really blame them? Cinema prices are so high to compete with not only other multiplexes, but also the many on demand services available. On the other hand for distributors, DVD and Blu-Ray markets have declined in the face of the cheaper option of legal downloading. Whilst simultaneously improving our movie watching experiences technology is complicating them. As I mentioned earlier Blockbuster, and also HMV were suffering at the start of the year because of their inability to compete with online distribution and exhibition. The companies could have utilised the popularity of this market and expanded into it, following suit of exhibitor Curzon, who run a home cinema business as well as operating as a cinema chain.

Distributors face other issues from how much hype is built around a film before theatrical release, momentum depleting fast once the film is released. However, online exhibition companies will advertise constantly, bombarding audiences, and maintaining their desire to watch a film. With the ease of consumption rapidly increasing so has spectators’ impatience, people could opt to download the film instead purely because they cannot wait. Of course companies are combating this by attempting to release films across as many platforms as possible at the same time, discouraging piracy. Yet this does not make up for the dwindling sales of DVDs or cinema tickets.

The advancements of technology have a knock on effect, causing either increased prices or a disinterest in another form of technology. The increased availability of online films means less cinema attendances, but in order to regain profit from the lack of film goers, ticket prices have steadily risen over the last few years, from £4.30 in 2002, to around £9 for a 2D film in 2013. Yet of course more expense is hugely discouraging to punters, which is even worse for cinemas when considering the majority of their profit, once prices have been negotiated with distributors, comes from selling snacks such as popcorn, which has been reportedly sold at 12 times as much as cinemas purchase it for. Given the modern day expense of what was once a great British pastime it is clear to see why spectators have chosen to download or stream films as opposed to attend the cinema, whether they watch online legally or illegally it is significantly cheaper.

In order to maintain the world of film as we know it, issues surrounding increased technology need to be addressed, of course whilst concurrently embracing these developments. These issues include piracy, rising ticket prices, DVD release window and the digitalisation of cinema. Vertical integration had its place in the film industry in the 1940s, yet perhaps now is the time for the film industry to work together in a fairer way, combining the multitude of services and consumption methods into a reasonable system that reduces the threat of destroying physical film or film watching in a cinema environment.

What do you think? Leave a comment.

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5 Comments

  1. Jon Lisi
    Jon Lisi
    0

    Good article and worth the read for those who are new to this subject. It is inevitable that DVDs will soon be outsourced by VOD and other digital streaming services. It is an extremely complex issue, but I would say never underestimate the general laziness of the mass public. In other words, if studios et al want people to see their films, the reality is that they will have to get on board with this new technology. This means that they will have to figure out how to stream their films for a reasonable price because this is the way most people will access films. I genuinely believe that in this case the mass public has the power.

    • Holly Honeyford

      Thank you. I agree with your point about the mass public. At the end of the day they set the trends, decide what’s popular and what’s not and that goes for films as well as technology.

  2. The biggest losers here are not the shops, but the shops that didn’t go with the technological advances of the industry. I’m talking about you blockbuster. You could have been bigger than Netflix if you would have taken the step.

    • Holly Honeyford

      Thanks for commenting! I think companies like Blockbuster could have the best of both worlds, maintaining their physical film business for people who prefer to consume that way, because their is still a market there, despite it being one in decline, but they could also expand and perhaps become a competitor to companies like LoveFilm and Netflix.

  3. Embrace piracy as a solution to reach viewers and monetize it to a resonable level.

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