"Glenn, you have the worst movie collection of anyone I know".
As our relationship clearly states in its charter, we were required to argue for the next twenty minutes about the merits of this statement. What became my basis for my defense was the nonsensical idea to buy DVDs in the first place. While I might have been backed in a corner due to my actual collection (Spider Man 3 and Dodgeball should not be the pillars of any collection, I still hold my stance on the issue. I decided to look more into the debate over DVD purchasing and formulate a more dignified conclusion.
1.) Economics
The starting point for anything I delve into usually begins with an economical framework thanks to my background in finance. We must compare two scenarios: 1.) buying a DVD 2.) not buying a DVD. We further our assumptions by adding that the movie in question is one that you enjoy and will watch multiple times over the course of the year(s).
The impact of the first option is fairly straightforward unless you add a few twists. If one wants to purchase a movie they simply pay up front for the disk. Depending on the extra features and packaging the final price is going to be in the neighborhood of $15 to $30. This price can be pushed higher by choosing a Blu-Ray edition. For the purpose of this debate I will not be looking at digital downloads. The reason for this is that a digital copy of a movie has certain benefits to ownership, but also lacks other perks associated to traditional ownership (ie special inserts, packaging).
More interestingly to analyze is the non-ownership choice. Here one has multiple options ranging from expensive (high end Netflix subscriptions) to free (asking around to borrow a copy, or even with a site like dvdlender.com) with many options falling in the middle (Red Box, Blockbuster). If we try to give each of these options a dollar amount it would look something like this (assuming you watch the movie three times a year):
Borrowing: $0.00
Red Box: $3.24 (with tax included)
Blockbuster: $12.33 (with tax included) Netflix*: $9.99
(assuming a middle package @ 9.99 a month watching three movies a month)
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Sidebar: I have always found it puzzling as to who could really be benefiting from enrolling in the highest Netflix package. For $25.99 this plan allows you to hold 4 DVDs at a time with unlimited uses per month. Additionally, Netflix has been pushing to have a greater number of titles available for viewing at any time over their online streaming service. So who would be the ideal subscriber to this plan? They would have to be able to keep their cost per watched movie below $3.00 (as one would expect to be able to replace the Netflix service with equivilent rentals from other sources. We woun't even discount for the fact that rentals from other sources have the added benefit of being instantaneous as opposed to the standard 2-3 day shipping period for Netflix). Our subscriber would need to watch 9 movies a month to just break even. However, we must look deeper. I cannot think of a reason to have 4 DVDs at a time. With the previously mentioned 2-3 day shipping period, one would have to be watching multiple movies a day to have a need for 4 separate movies. Even if we give the benefit of the doubt to our hypothetical subscriber and assume they will watch 10 movies a month (which might not seem like a great deal, but it is over two a week. Don't know where that time is coming from), we would still be better off with a lesser plan. They could even get away with.
- Receive movie #1, watch movie #1
- Return Movie #1
- Shipping
- Shipping
- Receive movie #2, watch movie #2
- Return Movie #2
- Shipping
- Shipping
- Receive movie #3, watch movie #3
- Return Movie #3
- Shipping
- Shipping
- Receive movie #4, watch movie #4
- Return Movie #4
- Shipping
- Shipping
- Receive movie #5, watch movie #5
- Return Movie #5
- Shipping
- Shipping
- Receive movie #6, watch movie #6
- Return Movie #6
- Shipping
- Shipping
- Receive movie #7, watch movie #7
- Return Movie #7
- Shipping
- Shipping
- Receive movie #8, watch movie #8
- Return Movie #8
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No matter the choice, a yearly look at the two options yields the same answer, economically you should not buy a DVD. By using a mix of methods listed, one could reasonably expect an average cost of $7.00 to watch a movie three times. This is much lower than even our low end DVD price of $15.00.
2.) The Tangible Factors
Our world is not ruled in perpituity by economists. For better or worse, people do not always make the most rational decisions. There are definite outside factors in this debate as to complicate things beyond an easy dollars and cents analysis. Round 1 clearly goes the way of rentals. But we have to take into account everything else that a DVD ownership means.
MTV's show Cribs gives a good look into what possessions mean to society. Every episode of the popular show, which features strangers judging prospective dates by their living space alone, goes through a similar format. The inspecting party typical looks through the closets for a sense of the inhabitants style, the bathroom for cleanliness and the movie/book/music collection for coolness. Our trinity of judgment comes down to clothes, toiletries and disposable entertainment.
The reason why DVDs are included in this list is because as a society we have made it very clear that we should buy the movies that we like. Almost to a point that a DVD collection becomes a personal advertisement for who we are. Making things worse is that we are often judged as much for what we do have as for the glaring omissions. I am a 22 year old male. I should have most of the following:
- Superbad
- Anchorman
- Gladiator
- The Bourne Series
- The Matrix
- Office Space
You know, the typical young guy movies. I could be belittled just as much for not having any of these staples as for having Pride and Prejudice, Love Actually or The Notebook.
We tend not to hide our collections away. There are entire departments in stores dedicated to supplies, tools and accessories for displaying your collection. If it was not important, these things would not exist and we would all just have our DVD cardboard box.
The other main benefit of DVD ownership is the random watchability. To some, it is very important to be able to throw on one of their favorite movies at any point. We have all been at a point when we really wanted to watch a certain movie for one reason or another. It can be a great boost to a night to be able to seamlessly flow from discussion of a scene from a movie to the popping in of the disk. You cannot have this same random watchability with rentals.
Finally, the aesthetics of DVD ownership are much greater than rentals. Some people honestly are excited by the packaging of a DVD. Others love the posters enclosed in the special edition. Still more like to be able to read a special behind the scenes piece on the making of the movie. These are features which are stripped out during the rental process.
3.) Rentals Have Other Benefits, Too!
Remember the Toy Story tape you got back in 1998? Remember the Toy Story Special Edition DVD you bought back in 2007? Do you think you might buy the Super Special Edition Toy Story Blu-Ray in 2010 when they surely release something bundled with the release of Toy Story 3? And when Disney completes its transition to full digital editions, as they are planning, what are the chances of you buying the Toy Story Digital Edition which you can watch on any device at any time?
The point is, within a 15-20 year time period we are going to have seen at least 4 different formats for movies. The movie industy is a saavy an industry as possible. Movies represent a stream of cash flows. At theatrical release the stream is very large. Slowly the flow fades off, until it picks up again at the release of the DVD. This flow also withers away eventually, until a special edition is released and the flow is back on. It is amazing how they have turned a static product into something which can continue to provide revenue through minor tweaks.
We will not see the end to this cycle. Movies will continue to change formats. By buying a specific edition of a movie, you have locked yourself into that format and edition. When was the last time you watched anything on your VCR? But you surely have poured hundreds, if not thousands, into your tape collection. We are all doing the same thing with DVDs (seems like we should have learned from the past, but, alas...). Sooner than later, DVDs and their players will go the way of tapes and the VCR.
The additional benefit of using a rental strategy is flexibility. While you will have to make the investment into new equipment right along with the purchasers, it will come with no sunk costs. Nothing is rendered useless in the shift. If we can learn from the current Netflix way of business, they will continue to shift their services to accomodate changes in the consumption patterns.
3.) Should You Buy DVDs
Despite my own personal opinion on the side of never buying DVDs, I cannot make a blanket statement. Who should buy DVDs then? Economically it is simple:
if,Retail Price of DVD < (Rental Average x Years Before Format Change) + (PV of Random Watchability) + (PV of Coolness Factor),where PV= personal value attributed
Those who have a high personal value attached to being able to watch whatever they want at the drop of a hat or those who put a high degree of value on the "coolness" of having a specific movie should continue to buy DVDs. For the rest of us who tend not to watch the same movie over and over or are not overcome with desire to watch a specific movie at a moments notice or do not care what kind of box they put The Simpsons: Season 13 in, should take a hard look at why they buy DVDs at all.
Oh, and as for my collection. Spider Man 3 was someone's gift to my girlfriend and I found Dodgeball.
GRM4RAL
