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Should We Move to a Digital-Only World of Entertainment Products?
In 2023, Best Buy dropped a bombshell: no more DVDs or Blu-rays by early 2024. This move wasn’t exactly groundbreaking, considering the streaming boom. The decision followed Netflix’s DVD-by-mail closure, highlighting the industry shift to digital-only entertainment goods.
Best Buy’s spokesperson noted the obvious — our viewing habits have evolved. Streaming offers convenience, but it lacks permanence. DVDs ensure ownership, whereas streaming’s uncertain rights mean potentially losing access. Yet, clutter-free streaming and instant gratification are undeniable perks. Furthermore, digital media is more sustainable and eco-friendly.
While movies may be fading from Best Buy’s shelves, the fate of physical video games remains uncertain. The gaming industry has been steadily moving toward a digital future, with over 70% of game sales being digital in 2022. This shift is evident in Best Buy’s gaming sections, which have dwindled compared to their former glory days.
Although digital media offers convenience, concerns arise regarding ownership rights and preservation. Despite this, new video game releases are bypassing physical distribution entirely, signaling a potential future dominated by digital-only gaming.
For collectors and preservationists, the changing landscape raises uncertainties about the future of physical media. While physical games may linger in niche markets, the trend toward digital-only gaming seems inevitable. As technology evolves, Sony and Microsoft are embracing a future where discs are relics of the past, catering to a generation that is becoming more used to a digital-only world.
However, with this big push from businesses to go completely digital, consumers are pushing back. A recent thread on Reddit explained how “people are losing access to their digital licenses.” There have also been many influencers on social media, especially YouTube, who have been urging people to start collecting DVDs and physical media.
Consumers who purchase and download digital video games have recently learned that Sony has the ability to cut off a user’s access to demos and digital games without warning and with no repercussions. The company did this recently with a demo it accidentally released and then deleted from the PlayStation Store soon after, “redacting access for users who downloaded it.” This has left many dealing with the fact that they are powerless to enjoy the digital media they supposedly own.
The lack of ownership has also become a frustrating problem for users who paid for subscriptions and digital downloads of Japanese anime from Funimation, a streaming platform.
Funimation announced that it is closing its doors on April 2, 2024. In the past, anime aficionados could pick between Crunchyroll, the largest anime streaming platform, and Funimation. However, Sony’s acquisitions of both platforms in recent years led to a monopoly in the anime streaming world. As a result, premium Funimation account holders will face Crunchyroll’s pricing regime from now on.
But that’s not the only blow. For those who purchased physical movies that came with digital codes for the movies on Funimation, Crunchyroll won’t honor these digital downloads. These codes weren’t just perks for subscribers; even non-subscribers could cash in by purchasing physical copies. Now, that avenue is closed forever, a huge setback for the anime community.
The debate over the relevance of physical media has sparked varied opinions. Some view it as outdated, citing concerns about physical storage space, collectors’ hoarding habits, environmental considerations, and potential damage to discs. Others have also complained about the cumbersome process of rummaging through shelves to locate the desired DVD, extracting it from its case, inserting it into the DVD player, and finally firing it up to play.
On the other hand, many influencers and consumers have engaged in discussions highlighting the advantages of physical media beyond mere collection or resale purposes. They emphasize the satisfaction of ownership and the ability to repeatedly watch their cherished content. Criticism has also been directed toward the increasing inconvenience of managing multiple streaming subscriptions to access desired movies and shows. The shifting licensing agreements among platforms often result in frustration for consumers who may find their preferred content unavailable on their subscribed services.
Moreover, cinephiles express concerns about the preservation of specific cuts or versions of films, which are often only available through physical copies, as streaming platforms typically offer only the latest or altered versions. Thus, the conversation surrounding physical media extends beyond its materiality to encompass considerations of accessibility, preservation, and viewing experience.
An important relative of the entertainment industry is music. For the past several years, vinyl records saw a resurgence in popularity, surpassing CD sales and helping boost the music industry away from becoming completely digital. In 2023, U.S. vinyl sales continued this rise for the 17th straight year, but that growth is reported to be losing momentum.
In Japan, music cassettes are becoming the hottest music trend. Stores in Tokyo are expanding their cassette tape sections, indicating a revival of analog recording media. Tower Records has seen a surge in cassette tape popularity, especially among those in their 20s and 30s. Sales of both new and used tapes are on the rise.
Last September, Tower Records Shibuya expanded its cassette section to 3,000 tapes, with those in their 30s being the main buyers, attracted by the tapes’ novelty. Vinyl records are also gaining traction, but cassettes are more affordable, making them a popular analog choice. The owner of Waltz, a cassette specialty store in Tokyo’s Nakameguro district, notes a shift in the cassette business landscape. Major artists are now releasing songs on cassettes, boosting their market value.
New cassette tape players are hitting the market, catering to both analog enthusiasts and tech-savvy youth. Apparel brands are also embracing cassettes, using them as invitations or keepsakes, showcasing their versatility in modern times.
Discussion Questions
How can businesses navigate ethical issues related to consumer access and rights in the digital media landscape dominated by streaming platforms like Netflix and Spotify, especially in the wake of closures like Funimation?
Amidst the shift toward digital-only distribution, how can businesses balance digital convenience with ensuring consumer empowerment, particularly in niche markets where physical media holds cultural significance?
Poll
Loading …BrainTrust
David Spear
VP, Professional Services, Retail, NCR
Gary Sankary
Retail Industry Strategy, Esri
There’s a big difference between the revival of analogue media such as cassettes and the general desire to have physical copies of things like games and movies. The former is driven by a form of nostalgia (or in some cases anemoia), novelty, and a craving for what is seen as authenticity. The latter is more a function of having guaranteed future access to what has been paid for. The big problem with digital, even outside of the streaming arena, is that it is easy to lose access because of device changes or licensing restrictions. The only guarantee of permeance is to own a physical copy. That said, most consumers are willing to run the risk of losing future access for the convenience, immediacy and simplicity of digital copies.
This topic is more important than the few minutes we will give it would indicate – remember your Orwell! – but insofar as this is RetailWire, not MusicWire or NewsWire, my thought is “how many businesses does this really affect?” Does it affect restaurants or garden shops? Does it affect macy*s or Home Depot? Hmm…How about bookstores and music stores? (I’d say ‘record”stores but that might come across as archaic) OK, we now have a retail audience, at least, but it strikes me as a limited one. Most of the action will center around producers and distributors. Staledating access to digital media is no doubt possible, but I’m not sure how important it really is: cutting off someone’s five year old movie or song is likely to be viewed as a soft form of extortion, and more trouble than it’s worth.
Craig – you got me thinking about this a bit more- where does streaming intersect with retail? There has been a huge push towards CTV shopping and a new trend is right around the corner (is it?) that will be pushing purchasing from within the movies and games you’re engaged in. Games already have the DLCs and in-game purchasing that makes up a good portion of digital sales. The next view will be a version of Qurate’s home shopping network while you’re watching John Wick 2- just to capture Reeves’ dashing new jacket for $175. Though I doubt it will be bulletproof. The consumer is at the bottom of the heap when it comes to intellectual property, but rebellions can come in many forms, and there will be no problems finding those who can transfer digital to physical mediums (eg DVDs)
The ease, immediacy, and convenience of streaming helped it become the primary mode of consuming media entertainment. By going mainstream, streaming rekindled a revival of the original analog experience and the associated physical rituals, especially for vinyl records. Legitimate concerns exist about future access to digital purchases beyond technology, device upgrades, or bankruptcies. Specifically, purchasing digital content or products does not mean ownership over the product; instead, it is a right of usage not transferable to anyone else.
This is a tough one. As more and more of us consume and store in whatever cloud service we choose, we loose control over our digital media. What prevents Apple/Google/Microsoft, etc. from raising cloud storage prices? What happens if Dropbox goes under? Speaking for myself, I never think about any of the “what ifs” I just store and enjoy while never bothering to read the eye-wateringly long legal stuff.
I suspect I am not alone there.
For once, I’m on the front of a trend. For the first time in a decade, I’ve found myself purchasing physical media again, specifically DVDs. I like classic movies, and I’ve found the hard way that access to some of my favorite titles, even ones I’ve paid for and supposedly owned “forever,” has gone away. I suspect this is an even bigger issue for gamers who like to share titles. Visit your local Half Price Books to see the buzz around physical media. My local store has significantly reduced its footage of books to expand CDs, DVDs, and, more recently, vinyl. I don’t think for a minute that this will go mainstream, but I do believe that there’s enough of a niche here that retailers and content creators should consider exploiting this trend. Case in point, Dolly Parton released her latest hit album, Rockstar on 8 Track. I think the last 8 Track player I ever saw was in my dad’s 1975 Coupe d’Ville. But here we are.
The proverbial train has left the station and it’s not coming back. Sure, there will be small pockets of analog enthusiasts, but the high, high majority of users will continue to leverage the digital assets we’ve all become accustomed to. All innovation has tradeoffs, but the advantages of convenience, access and simplicity of the digital model trump the cumbersome nature of the older physical past.
We have grown accustomed as a society not to own entertainment content but instead move to a subscription model where customers have digital access across all of their mobile devices and smart TVs. In the new business model, entertainment content migrates from Netflix, Hulu, Prime, etc, and there is only a sense of permanence or ownership if you buy a physical copy of the LP, DVD, etc.
The subscription model also represents a societal shift from an ownership economy to one where we have access to seemingly limitless content across streaming platforms. This affordable model offers the convenience, value, and access that customers expect. Yet, there is a risk that even if you buy a digital version of your favorite movie, you may lose it if you have a physical copy.
We have also seen GenZ and Gen Alpha suddenly want to own either CDs or LPs of their favorite artists. Additionally, we should expect owning physical copies of your favorite content to be a niche trend.
I think we really have to separate the trend aspect of this to the value aspect. I very much see the value in owning physical copies of music and movies. That said, to be producing physical copies at mass scale just doesn’t make sense anymore given consumers’ behaviors. It would be wise to still produce physical copies, just not in the large quantities that used to be produced. Then, the ones that exist are inherently more valuable anyway and appeal to the true purists.
Retailers who listen to the market always win. Drop any product or category that doesn’t sell or contribute.
As I was reading this article the television went out on my hotel room. If the world becomes 100% digital then we are at the mercy of technology and whatever access sellers choose to give us. I don’t think I like that world.
On the other hand there’s this… “Others have also complained about the cumbersome process of rummaging through shelves to locate the desired DVD, extracting it from its case, inserting it into the DVD player, and finally firing it up to play.”
Life is HARD.
There is real danger in “digital only” distribution. When entertainment companies lose physical connections consumers lose a great deal of brand connection. That doesn’t mean digital distribution is wrong. Rather, there is a serious unexpected downside to the rational choice of digital distribution. As a result, companies making the move need to work hard to build other ways to have physical connections with what they offer.
So, when Best Buy no longer has DVDs on the shelves, there is no longer an obvious entertainment connection in their stores. What else can they do to maintain or establish that connection? It will take considerable smart thinking to find a way NOT to lose all those things which are built through physical connections.
From a retailer perspective, the switch from media to streaming eliminated several categories. Not only the media but the supporting hardware and accessories. Yes, retailers need to go where shoppers are going, but shoppers were converted to streaming by strong marketing from streaming service providers. Retailers surrendered without a fight. No counter argument on the value of physical media or physical media offering a better viewing or listening experience.
The issue of personal ownership rights of digital media is such a minute slice of a fractional market that it really doesn’t apply. The article focuses on situations in Japan, and a few retailers here in the USA but not much else, because it has no true traction to the majority of the digital media market. We are moving to a complete digital distribution model because that is where technology can offer the best traction and fulfill the needs of the consumer. The free market will decide all of this through consumer purchasing power and it looks like it already has.