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DVD rentals: $1

We've previously made the argument that DVDs are a much better value for consumers; that 2 hours of audio and video, plus a wealth of special features offers more entertainment bang for the buck than 45 minutes of audio only. Its been our view that DVDs have been cannabilizing CD sales.

Now comes another economic assault on high priced CDs: $1 DVD rentals. A company called DVD Station has set up kiosks in retailers such as Altitunes (located in a few dozen airports) offering DVD rentals for the low low price of one dollar a day.

That's right, $1 per day. This is their ordinary price, and not a promotion or special.

It makes a whole lotta sense once they reach a critical mass in airports: Pick up a DVD at your departing airport, watch it on your laptop while you fly, return it when you land at the next airport. For a buck. Maybe Jet Blue or some other airline will buy them.

As far as CDs are concerned, this is a bad thing. Any discretionary entertainment offering which competes with CD sales at a lower price point ultimately pressures the music sales, while indirectly referencing the artificially inflated prices of CDs. This is yet another example of the music industry getting outflanked in the battle for the consumer's entertainment time and money.

One cannot help but be amazed at the mismanagement the industry has inflicted upon itself.

DVD Station's background can be found here.

Tuesday, March 30, 2004 | 07:10 AM | Permalink | Comments (6) | TrackBack (2)
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Comments

I think you are correct that there is some substitution effect between the two, in that people are shopping for entertainment and because they may value a movie on DVD more than a CD, they buy the DVD. But there are some differences that make the price comparison unfair.

DVDs or movies are typically only watched once or twice (unless you are kid) and that's about it. So the true price comparison would be a movie at $8 or whatever.

If you buy a new record and like it, you could listen to it a hundred or more times over the course of your ownership, so you might place a higher value on that since you are getting more hours of entertainment for your dollar.

But for every once that you listen to a hundred times, there are those that you listen to once, so maybe you have to factor that in. I think CDs are too expensive, but that's only because I want to buy more of them.

Posted by: Dave S. | Mar 30, 2004 1:17:14 PM