Quote Originally Posted by Woochifer
And your post is a perfect illustration of VHS-era thinking. The home video industry is now a purchase-driven market, whereas in the VHS era it was a rental-driven market. All of your points address rentals, but don't speak at all to the behavior of the purchase market, which grew by leaps and bounds because of the DVD. Downloading will basically take over the market niches currently occupied by PPV and rentals. But, in order to completely supplant disc media, video downloads cannot come locked down with DRM and play restrictions.

Plenty of people like to watch favorite movies more than once, loan DVDs to friends, take movies with them when they travel, take their time to mine through the bonus features, etc. All of the video download services out there currently don't allow for that kind of flexibility -- the files are restricted to a specific device, they lack portability, they expire/self-destruct, etc. The people for whom this does not matter are the same people who currently subscribe to Netflix and/or watch PPV. With restrictive DRM, self-destructing files, and no true "on demand" downloading speeds, video downloads are nothing more than a lateral market shift away from existing rental/PPV sources.

You think that parents will be willing to shell out a view fee for 30th time when their kids want to watch Cars yet again? Or if you paid to download a movie, but didn't have time to watch it before the file expired -- are people going to be fine with paying the rental fee a second time to watch a movie that they already have sitting on their hard drive?

Downloading might have the potential displace disc media if the download files allow for unlimited viewing and portability from device to device, but I doubt that the piracy paranoid studios will make it that easy. If anything, a new emerging model that's coming online is the Burn-to-Disc download purchase, which would get around the limitations inherent in video downloads by giving consumers additional options and flexibility.
Talk about hitting the nail on the head! I remember back in the day of working at a video store and parents would come in renting THE LION KING week after week after week, eventually it became (once DVD came out ) more profitable to offer people a buy option, which is exactly what happened. They could either rent the movie for 4 bucks or after the movie was out for 4 weeks they had the option to buy it for 10. What ended up happening though is that store went out of business because they couldn't keep up with the demands of buying versus renting. Good idea at first, but a long-term death blow.