At least initially, it appears that Microsoft's (NASDAQ: MSFT) deal with Disney (NYSE: DIS) to sell downloads of Disney feature films through Microsoft's Xbox Live does not represent an immediate, substantive threat to dominant DVD outlets, including Blockbuster (NYSE: BBI) and Netflix (NASDAQ: NFLX), but as is the case with most technological volleys in the digital age, more time is needed to see if consumers are willing to make a purchasing shift. Blockbuster, Netflix, and DVD sellers like Best Buy (NYSE: BBY) can feel confident that their respective market shares will not evaporate overnight, due to their primary advantage: reach. Currently there are about 11.
6 million Xbox 360 consoles in use, including 5.6 million in the U.S.
In comparison, penetration of DVD players in U.S. That fact, combined with DVD players' likely continued affordability relative to Xbox hardware, should help maintain the DVD player's healthy lead, and by extension the contemporary DVD movie distribution/sales system, for the immediate future, even given the enhanced HD quality that Xbox Live downloads may offer.
But longer term, as gameplayer ownership increases, the Xbox/gameplayer movie distribution option represents a market share antagonist, one that may very well compel the contemporary distributors to volley back. That return volley may include further reductions in DVD movie list prices and/or faster delivery times (under 8 hours) to keep pace with the postmodern entertainment consumer's demanding mantra of more choices, quick delivery, and convenience. On Wednesday, Microsoft closed up 16 cents to $29.
49, Disney gained 9 cents to $33.98, Blockbuster fell 4 cents to $4.43, Netflix declined 11 cents to $20.
01, and Best Buy fell 5 cents to $47.46. At least initially, it appears that Microsoft's (NASDAQ: MSFT) deal with Disney (NYSE: DIS) to sell downloads of Disney feature films through Microsoft's Xbox Live does not represent an immediate, substantive threat to dominant DVD outlets, including Blockbuster (NYSE: BBI) and Netflix (NASDAQ: NFLX), but as is the case with most technological volleys in the digital age, more time is needed to see if consumers are willing to make a purchasing shift.
