The DVD golden age
More and more Israelis are building home DVD libraries - right before new technology takes over.
Moments before the DVD gives way to new technologies, Israel apparently has entered the DVD Golden Age. More and more people are building home movie libraries alongside their collections of music and books.
Rami Yaron, deputy director of marketing for NMC United, says DVD film sales are increasing in Israel, while film rentals are losing market share. Six years ago, the (legal) DVD market was comprised of 10 percent sales and 90 percent rentals, he says. But sales now make up 75 percent of current volume. The most popular purchased titles are collections (starring Marilyn Monroe, directed by Alfred Hitchcock, etc.), box sets of popular television series, and, of course, children's films.
The decline of the rental can be seen in the closure of video stores around the country. The merger between the two leading local players, Blockbuster and The Video Giant (Anak Havideo), a year and a half ago, is evidence of the dwindling market. Before the merger, Blockbuster Israel had 12 stores and 236 vending machines; the Video Giant offered 26 stores and 56 automated machines. The merged chain, called Blockbuster, now runs 27 stores and 250 automated vendors.
Local industry officials say the blow to the rental market stems mainly from movie downloading, which has gained momentum as the capacity of broadband Internet increases, and the growing popularity of pay-per-view films on television.
"Pirate downloads damaged mainly rentals, because video stores initially release a film for rental and sell it only later. Over the years, the loyal rental customers were the ones who waited with bated breath for a certain film. Now they don't have to wait. They can just download it," Yaron says.
Yaron says the Internet is responsible for flagging rental machine profits, too. Much of the profit in that arena came from pornography, but that market has been damaged by pornographic Web sites, he says.
Given all that, how can one explain the fact that many Israelis are purchasing DVDs or ordering pay-per-view movies on satellite or cable, when downloading is now faster and more convenient than ever?
The foremost reason is obviously price. The major television studios are promoting DVD sales, which are now a vital component of their profits, and are waging war on pirate downloading through across-the-board price cuts. If six years ago, a DVD of a newly released film cost NIS 120-180, now the price is NIS 80-100. A few months after the release, the price drops further, with many venues offering three or four films for NIS 100.
"People often come to the store to rent a certain film, discover that it's been borrowed, and buy a copy of the same film," says Asa Ofek, marketing director of The Third Ear. He says that when DVDs cost three for NIS 100, the difference between renting and buying is negligible - sometimes as little as NIS 10.
In addition, DVDs are more available for purchase now than they were in the past. Local consumers once had to go to a video library or music store to purchase a film. Now they can do so almost anywhere: Bookstores, music stores, grocery and drugstore chains, toy stores, office supply stores, and stores that cater to children. Films even can be found for sale in local gas stations.
Maor Gofer, director of the DVD movie forum on the Tapuz Hebrew Web portal, has 550 films in his home library. He says he initially bought from international Web sites, but that he now buys mostly in Israel. "The quality is better than it was in the past," he says. "And the distributors internalized the fact that you have to treat a movie with respect. A film shot in wide-screen format is almost never sold in another format."
Packaging has improved as well. "Warner films, which entered the market a few years ago, has completely changed its face," Ofek says. "Not only did they lower prices, they invested in package design. The distributors, who used to take design lightly, realized that a customer's decision to put a film on his shelf is influenced by the package."
"Special features," which typically accompany a purchased DVD but are not available for download or on pay-per-view television, also make discs more attractive: Tracks featuring directors' or actors' commentary on the film, short documentaries on the film's production, scenes deleted in editing, and, in some cases, an alternative ending, can provide added value for those who already have seen the film.
It is impossible to discuss Israelis' growing fondness for purchasing DVDs without mentioning the run on sophisticated technology. "More people are buying home theater systems and pricey plasma screens, and they buy the films in order to enjoy that equipment. If you buy the hardware, you have to buy the software that runs on it," explains Blockbuster Israel director Dror Liran.
In an age when technology is developing at breakneck speed, there are no undisputed leaders. Just as "video killed the radio star," the DVD's glory days will soon be over. "We may have to replace all our films. My collection may become worthless in a few years," Gofer admits.
The two technologies currently breathing down the DVD's neck are Blu-ray and HD DVD, two kinds of discs that store much more information than a regular DVD, thus providing much improved picture and sound. The discs and their players are still relatively expensive, but prices will inevitably plummet.
Meanwhile, the film sales industry's biggest enemy is still illegal downloading. Data gathered in the United States over the last two years indicates that for the first time, DVD sales have slowed significantly, and analysts predict a rise in online film consumption. In keeping with that trend, Blockbuster Israel announced last month that it intended to launch a pilot Web site in early 2008 that would sell film downloads. Now it is official: The fall of the DVD is only a matter of time.
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