What Could Have Saved the DVD Business

For those that pay attention to the trade, and by that I mean Hollywood films and shows and the various developments within the business, there is one major fact that has become apparent: Hollywood has become more and more risk averse over the years. The current climate for films and shows is bigger, more expensive, more impressive. Story and characters and long-form storytelling that pays off is less and less important as the businesses chase the biggest and splashiest hits they can get, spending hundreds of millions of dollars on blockbuster entertainment, all but ignoring the kinds of smaller shows and movies that were successful for decades.

Every studio wants the next Marvel Cinematic UniverseWhen it first began in 2008 with a little film called Iron Man no one suspected the empire that would follow. Superhero movies in the past, especially those not featuring either Batman or Superman, were usually terrible. And yet, Iron Man would lead to a long series of successful films, launching the most successful cinema brand in history: the Marvel Cinematic Universe., the next The Fast and the FuriousStarted as a film about undercover policing in the illegal street-racing community, this series has grown to encompass a number of different genres and become one of the most bankable franchises in the world., the next Star WarsThe modern blockbuster: it's a concept so commonplace now we don't even think about the fact that before the end of the 1970s, this kind of movie -- huge spectacles, big action, massive budgets -- wasn't really made. That all changed, though, with Star Wars, a series of films that were big on spectacle (and even bigger on profits). A hero's journey set against a sci-fi backdrop, nothing like this series had ever really been done before, and then Hollywood was never the same.. Few, though, are willing to develop the kinds of low- and mid-budget films that could gain fan attention and develop followings to actually grow into the next big thing or, barring that, at least be solid, small performers at the Box Office. Mid-budget comedies are the way of the past now, as are most comedies in general. Dramas are only really big around awards season, and that’s just so the companies can compete for titles and accolades before they go back to advertising their next blockbuster. This all but ignores the fact that to build most of these grand franchises you have to have smaller hits that pay off. Would we have the massive blockbusters of Fast and Furious without the success of the mid-budget 2001 film The Fast and the Furious? Would you have the Star Wars franchise, which Disney paid $4 Bil to buy, without George Lucas’s $11 Mil independent original?

Of course, the reason why Hollywood leans so heavily on massive spectacle (which costs an arm and a leg to make) is because that’s all that makes them money now. Streaming is a money-losing proposition, with each studio effectively pouring their money into a pit that is each of their streaming services. Blockbusters are great when they hit, and they make the studios billions in revenue, but they’re just as likely to fail with modern audiences. Sure, Disney is having a banner year this year with the releases of Inside Out 2 and Deadpool & Wolverine netting the company almost $3 Bil so far at the Box Office this year, but that comes after a hugely unprofitable 2023 where the company lost hundreds of millions on the likes of The Marvels, The Little Mermaid, and Indiana Jones and the Dial of Destiny. No one talks about the smaller films the studio made, in large part because the studio wasn’t making smaller films to fill in around the wins and losses of their big budget movies.

Over on TV the matter isn’t much better. Most streaming series cost millions to make. Disney, for example, spent over $230 Mil to make Secret Invasion, a series everyone hated and no one watched. Reportedly Star Wars: The Acolyte cost upwards of $100 Mil per episode. And that’s not an outlier. Shows are often costing that much to produce because the streaming networks need big, splashy products to advertise to their subscribers to keep them paying. Sometimes this gets people watching (although, in the case the recently canceled Star Wars: The Acolyte, sometimes not so much) but how many shows that were released on the streamers in the last year do you remember watching? Or anticipating? Or wanting to see future seasons of? Probably not that many, and all because the studios aren’t spending the time to build the audiences for their works. They have a name, they use the name, and they pray that the money they’re spending will come back in after.

The whole reason for this mess is simple: DVDs are dying. It might be silly to pin the blame on the disc format, but effectively it’s true. From the introduction of the DVD in the United States in 1997 through to the late 2010s, DVDs sales were a huge part of the revenue studios would make on a movie. A film could release in theaters and even if it only made back its budget (and sometimes less) during its initial run, it could be expected to make that again through DVD sales. If a film was mildly successful at all during its initial run then it would be a guaranteed money maker for studios. It didn’t matter if it was a big budget release or a smaller film, DVDs would sell.

That’s part of the reason why you saw so many franchises get sequel after sequel on the direct to video market in the DVD era. Multiple HellraiserBorn from a short story by Clive Barker, this series introduced a new kind of killer to the burgeoning 1980s Slasher scene, a demon from Hell with the promise of pleasures for those who opened a puzle box. Those pleasures, specifically, were: gore, screams, gore, terror, and gore. films, all those American Pie movies, anything branded with National Lampoon; it didn’t matter if the films were expected to be good, just so long as they could be cranked out into reliable sales figures. Studios had a money printing machine and, for nearly two decades, they used it for all it was worth. But when you consider how many movies we were getting, at every level of Hollywood, this wasn’t a bad thing. DVD sales were good, and they encouraged diversification.

Streaming killed this. The major selling point of streaming was getting whatever you wanted, when you wanted, all from the comfort of your couch. No more needing to wait for something on cable, no more having to go to a rental store to find a show or movie. No more needing to buy DVDs and keep them on shelves like a plebian. When NetflixOriginally started as a disc-by-mail service, Netflix has grown to be one of the largest media companies in the world (and one of the most valued internet companies as well). With a constant slate of new internet streaming-based programming that updates all the time, Netflix has redefined what it means to watch TV and films (as well as how to do it). and HuluOriginally created as a joint streaming service between the major U.S. broadcast networks, Hulu has grown to be a solid alternative to the likes of Netflix and Amazon Prime, even as it learns harder on its collection of shows from Fox and FX since Disney purchased a majority stake in the service. came around they showed people that you could get everything you needed with just a couple of subscriptions. It was a golden of streaming and, because of the ease of use, it encouraged people to stop buying DVDs. So they did.

Netflix was the DVD killer, more than any other streamer, and the leaders of the company had that in mind. They specifically wanted to take the power over movies away from the studios and the movie theaters and put it in the hands of the users. Like most tech leaders, they wanted to “disrupt the industry” and they did. Disruption came in and destroyed the old business model, but in its place we’ve gotten something demonstrably worse (which is also what usually happens when tech bros disrupt an industry). Netflix was so successful that every other studio needed their own streaming service, and they took their products and moved them to other networks. Now, instead of anything you want to watch on a single service you have studio libraries split across dozens of streaming services and if you want all of them you have to pay hundreds of dollars a month just to get it. This is no longer the golden age.

Thing is, during the heyday of DVDs (and in this context I am lumping DVDs and Blu-Rays together) you could easily find anything you wanted on store shelves. Yes, you had to buy it, and yes you had to go to a store to get it, but then the movie was yours, on your shelf, any time you wanted to go back to it. There was no need to worry if the movie was no longer available on the services you were paying for. There wasn’t the chance that you might buy a digital version and then the licensing deal would expire and you’d lose what you paid for. The disc is there and it will always be there for you. That was (and, for those of us still trying to maintain collections is) a great thing. And it’s becoming increasingly rare.

Thing is, even here, there was a chance for DVDs to be saved, but it would have needed a specific series of events to occur. Tragically, all of those events were essentially in the hands of one company: Blockbuster. There were multiple moments where Blockbuster had a chance change the fate of their own fortunes (and the home video market as a whole) and they didn’t. These include:

1. Licensing DVDs from the studios the same way they’d been licensing VHS tapes. Blockbuster had an arrangement with the major studios to buy tapes at an inflated price (usually around a hundred bucks a tape). This meant that only Blockbuster, and other major chains, could afford to get the tapes early (because that price was set for everyone) and home video collectors would have to wait months, maybe even a year, to buy the film for their collections. When the studios approached Blockbuster about arranging the same deal for DVDs, Blockbuster declined. On its face this was good for DVD buyers because studios decided to keep DVDs priced low (no hundred buck initial window) and sell them direct-to-consumers without the expected rental window. Bad news for Blockbuster, but seemingly great otherwise.
2. Of course, then Netflix came along with their DVD-by-mail service, introducing a big competitor to Blockbuster. DVDs being cheap meant Netflix could afford to get into the business. And since DVDs were smaller than VHS tapes, and didn’t need to be rewound, this made the business pretty cost effective. By rejecting DVDs sales deals Blockbuster created one of their biggest rivals, in effect.
3. Interestingly, in the early days Blockbuster had a chance to buy Netflix. The DVD mailer was struggling to get going, and they offered themselves to Blockbuster for $50 Mil. Blockbuster rejected them, and over time Netflix got their feet under them and became the rival they were always going to be. Blockbuster tried to pivot and do their own DVD-by-mail service, including allowing customers to return DVDs to stores, but they could have just owned Netflix and controlled their fate. Also, Netflix sued Blockbuster eventually for infringing on DVD-by-mail patents, which wouldn’t have happened if they’d been bought out instead.
4. After this, Netflix offered to buy and merge Blockbuster’s DVD-by-mail business with Netflix’s own, creating a larger, more powerful service. Although this deal was initially approved, Blockbuster shareholders revolted, killed the deal, and figured they could go it on their own. They were wrong.
5. Netflix introduced streaming, and changed the game again. Blockbuster did try to compete here, eventually, and failed. But even then, if Netflix hadn’t been the powerful entity they were, if they had instead been bought by Blockbuster, this never would have happened. Blockbuster ensured their own demise and, eventually they went out of business while Netflix is now the largest movie studio in the world.

Now, realistically the writing was on the wall regardless. At some point some streaming service was going to come along that would completely change the game. Hulu was out around this time as well, and it had the backing of a few studios. All it would take was the right competitor at the right time to set the old ways ablaze. If not Netflix than someone. Presumably, though, this would have taken many more years, and might have happened in a way where DVDs didn’t have to die almost entirely. Maybe some kind of coexistence was possible without Netflix blowing up the whole industry. It’s entirely possible.

Still, that’s not the world we live in. Instead we live in the one where Blockbuster, in their position as the most powerful rental and retail movie chain in the world, bungled everything so bad, over and over, that they effectively killed DVDs. It took many years, and many mistakes, but it did happen. And now we have to deal with this new world where streaming sucks and DVDs are barely a blip at all. Where Hollywood chases the biggest hits and doesn’t care about anything else. It’s a case where you expect something to give, eventually, but what and how is too hard to see.

Hopefully we get some new kind of golden age, one that’s great for consumers once again. Until then, though, I’m going to cherish my DVD collection and hope that the format, as a whole, doesn’t completely disappear too quickly.