Americans Will Watch More Streaming Movies In 2012 Than DVD And Blu-Ray Combined

That shut-down, boarded-up Blockbuster video store is kind of a metaphor for the future of DVD and Blu-Ray movies. A new report shows that video streaming will surpass DVD and Blu-Ray discs as American’s favorite format for watching movies at some point this year. Thanks to popular video streaming sites like Netflix streaming video and Amazon streaming video, Americans will purchase and watch more movies via online streaming video in 2012 than they will over Blu-Ray and DVD discs combined.

We’re not talking about illegal downloads here, we’re talking paid, legal digital copies of movies and TV episodes as streaming video. The report from IHS Screen Digest goes into whopping numerical detail, predicting that Americans will watch 3.4 billion movies online this year compared to buying just 2.4 billion physical, hard copy Blu-Rays and DVDs.

“This year marks the tipping point as U.S. consumers now are making a historic switch to Internet-based consumption,” IHS senior analyst Dan Cryan said in the report. “We are looking at the beginning of the end of the age of movies on physical media like DVD and Blu-ray.”

Amazon Prime and Netflix account for basically entire streaming movie industry. The study detailed that 94% of all streaming movies in the U.S. are viewed over Netflix and Amazon streaming.

Oddly, the study also showed that Americans will spend more time actually watching the physical DVDs and Blu-Rays than they will their streaming videos over the web. U.S. consumers are predicted to spend a billion more hours watching Blu-Ray and DVD discs – despite buying more digital streams and download units. We’re apparently more likely to force ourselves to watch a bad DVD or Blu-Ray all the way through, whereas on video streaming sites we’re more likely to turn off a lousy movie earlier.

STREAMING VIDEO IS LESS LUCRATIVE FOR MOVIE STUDIOS

Surely this news would be greeted with champagne and executive bonuses across the movie industry, right? Just the opposite. Hollywood makes far less money off streaming movies, even when they’re paid for in full.

The streaming online movies model is far less profitable for the big movie studios. Netflix and Amazon Prime offer these movies through the “all you can eat” model, wherein users play a flat monthly fee to watch all the movies they want. Since the buyer doesn’t have to re-up and pay for every single movie, streaming video revenue is expected to account for only $1.7 billion in revenue this year – compared to nearly $12 billion in revenue for the “declining” DVD and Blu-Ray sales sector.

On average, viewers end up paying only about 51 cents per movie or TV show episode on streaming movie sites. By Hollywood standards, 51 cents is not a strong price of admission.

XBOX 360 CONSOLE NOW USED PRIMARILY FOR THINGS OTHER THAN VIDEO GAMING

Movies aren’t the only shrink-wrapped product sold in a little plastic case that’s facing a significant decline. Microsoft has determined that Xbox 360 owners now use their gaming consoles more for watching movies and listening to music than for actually playing games.

To Microsoft, though, that is cause for champagne and bonus checks. This had been their plan all along, as the Xbox was initially intended as a “trojan horse” that consumers would buy for video games, and keep using for digital entertainment purposes. The Xbox 360 gaming console was a clever scheme to make the cable television box obsolete.

Microsoft had already loaded up the Xbox 360 with video streaming apps for Netflix, ESPN, Hulu, and YouTube. Their recent additions of apps for HBO Go, Major League Baseball, and Comcast video on demand seals the deal on marginalizing video games as the primary media for the Xbox 360.

SMARTPHONE MANUFACTURERS STRIKING DEALS FOR DRM

That dry acronym DRM stands for Digital Rights Management. It’s the difference between legal steaming and illegal streaming. Given the number of streaming movies we now watch, it’s also the difference between billions of dollars.

Smartphones and tablets are a big driver of streaming videos’ leapfrogging of DVD and Blu-Ray content, and the manufacturers know it. The previous model legal DRM was for content providers to just buy huge libraries of music or movies, taking the good with the bad. That’s why you see many awful movies in your Netflix recommendations.

The new, emerging model sees mobile, device manufacturers actually building the digital rights filters straight into the mobile device. Android phone manufacturer HTC last week bought a huge stake in the cloud-based video service SyncTV. HTC also licensed SyncTV’s Marlin DRM software, used widely across Europe and Asia to scramble unlicensed movies and music. The future is mobile devices that won’t even let you try to pirate content.

3D MOVIES ON A 3D SMARTPHONE, WITH SAMSUNG 2D TO 3D TECHNOLOGY

Any discussion of any kind of movie-watching interface inevitably turns to the possibility of 3D. Mobile phones have taken the lead with “glasses-free” 3D delivery, LG put out a no-glasses-required 3D cell phone last year, and HTC is following up with their own soon.

Both of these models can (or claim they can) show 3D content in true 3D. Most movies and TV shows, of course, are not in 3D. A new model under development by Samsung promises a 2D to 3D “hot key” that will convert 2D content to 3D.

Glasses won’t be required. But the way the industry is moving, copyright compliance will be.