Downloads vs. Discs - An Analysis

There seem to be two camps in the AV field in regards to content - downloads or physical media. The download camp says that physical media is quickly becoming a thing of the past. People are more and more looking to services like iTunes, Amazon OnDemand, streamed Netflix, Hulu, Pandora, and more to get their content. They site the prevalence of iPods, laptops, netbooks, and multifunction cellphones as the content providers of the future. What they can't download and store locally, they'll stream. What they can't buy legally, they'll torrent. What they can't torrent... well, it just doesn't exist does it?

The other side holds their discs up high and scream, "You'll take my disc from my cold dead hands!" Physical media has the advantage of portability and universal compatibility. Physical media doesn't rely on a WiFi or cell reception, it doesn't care if you have an unobstructed view of the southern sky, and doesn't require some sort of workaround to play in your buddy's player. Discs have better audio (pretty much universally) and usually better video quality. Physical media comes with nifty cases, DVD extras, collectible keepsakes, and much more. Plus, you can (technically) burn that media to a drive and take it with you if it is all that important to you. Blu-ray and others have finally (after years of consumers asking for it) started providing digital downloads of their content along with disc purchases.

But the fact remains that the landscape of the user is changing. While many of the consumers currently buying have grown up with DVDs, CDs, cassettes, and even vinyl, there is a whole new generation that is equating content with the Internet, their cellphones, their iPods, and YouTube. It won't be long before this new generation will be the ones with the disposable incomes and the will to use it. These will be the consumers that will drive the way that content is delivered in the future. I'm sure many of you have a memory of some adult telling you that laserdiscs or some such would never die and you, even in your youth, knew that they were wrong. So, who will be right?

Let's look at the current landscape. DVD sales are dropping as Blu-ray sales are growing. The problem is that Blu-ray isn't growing to the same proportion that DVDs are dropping. Add to that the fact that DVDs are still much cheaper than Blu-rays and you have a considerably lower number of physical discs that are being purchased. While no statistics have been released as to why, the higher costs of the Blu-ray over DVD discs in this unstable economy is surely at least partly to blame. While hardware is coming down in price, people are still looking at the $25-$30 price tag of the Blu-ray movie versions and getting sticker shock.

As the same time, downloads are getting easier and easier to access. Nearly every TV show can now be viewed (in the US at least) on Hulu.com soon after it airs with many older episodes available for months afterwards. iTunes has been the number one music retailer for some time now and looks unlikely to lose that spot. The physical media camp is right in that video quality and audio quality is usually inferior to the disc-based counterpart, but that is starting to change as well. Amazon On Demand offers mulitchannel audio and Microsoft announced that their downloads from XBox Live would be in 1080p starting this fall. Netflix and iTunes already offer high definition streams/downloads (not all in 1080p but better than the SD stuff we've had available up until recently). Audio quality is still the redheaded stepchild relegated to stereo in most cases but other than Audioholics and people that categorize themselves as an audiophile, no one really cares.

The real deciding factor just might be the confluence of what is happening in the world right now. The economy is bad so people are looking for ways to save money. DVDs are on the way out so people are reluctant to buy more of what they are being told is a dying format. At the same time, the "new" format (Blu-ray) is expensive in both hardware and software discouraging purchases (or at least making people think twice before that impulse buy). Online options are either free or no more (and often less) than a rental or purchase and can be either streamed or downloaded. What truly would be bad for the physical media camp is if people, out of frugality, got used to downloads. Currently, many people have never really tried or only have a cursory experience with downloads. If they start experimenting more as Blu-ray refuses to lower their prices, that could spell trouble. Right now, a Blu-ray disc is averaging nearly $10 more than the download. Would you pay $10 more for better sound, slightly improved picture, and the extras? Would your friends?

Enter into the fray services like Netflix and Blockbuster that combine physical and streamed media (and I wouldn't be surprised if Netflix started selling downloads in the future) and Redbox which offers the convenience of renting at your grocery or fast food store for a very cheap price, and even discs are becoming disposable. I know people that rent from Redbox and if they don't get a chance to watch the movie, burn it to a hard drive. Legal? No. But they do it.

Will physical media disappear tomorrow? Certainly not. But Blu-ray may be digging it's own grave by relying on people to be willing to pay more for quality. In times like these, it may be better to take the financial hit just to make sure that your base doesn't try the competition and realize that your advantage isn't as great as you make it out to be. On the other side of the aisle, the download camp needs to continue to refine their services so that they are offering a close enough product to their physical competitors with as few of the technical problems (delays, dropouts, quality issues, long download times, etc) as possible. Blu-ray may be encouraging many to try downloads with their prices but it is up to the download services to convince those consumers to stay.