Friday 24 November 2017

The death of DVDs in Ireland: 4 reasons why Xtra-vision collapsed

Adrian Weckler

Adrian Weckler

It looks like the end of the road for Xtra-vision's video store business.

The company that owns it, Hilco Capital, has admitted that the business isn't sustainable anymore and has had a liquidator appointed to sell off the assets. The bulk of 580 jobs in the chain's many stores around Irish towns and cities will be lost right away.

Why has this happened to Xtra-vision? Should it have changed course to a digital model earlier? And does this mean the end of the traditional video rental market as we know it? Here are four reasons why Xtra-vision has come to an end.

1. Home movie viewing has shifted away from physical DVDs

As a format of consumption, DVD sales and rentals have been plummeting in the last five years.

While piracy has played its part, legal alternatives have been the real killer. Netflix has, conservatively, around 250,000 Irish subscribers. What it lags it new releases, it makes up for in low price (on average, €10 per month or less). It also has an expanding catalogue of TV shows that people want to watch (Making A Murderer, House Of Cards).

Netflix isn't the only new player. In Ireland, Sky has gnawed away at DVD sales with its on-demand services. Virgin Media (formerly UPC) hasn't been far behind. Even the toddler sector -- one of the last dependable markets for DVD consumption -- is now ebbing away with expanded kids' content on on-demand players and internet streaming services.

2. TV and movie consumption has even moved away from the sitting room

For the likes of Xtra-vision, it's not just that DVD sales have fallen. It's that many people don't even think of the sitting room (where the DVD player sits) as the place they necessarily have to watch movies anymore.

TV consumption is far less centred around the living room than it used to be. The evidence for this is overwhelming. One of RTE's video partners -- Ooyala -- released figures last month showing that Ireland has the highest mobile video viewing figures in the world.

And current research from Dublin-based analytics firm Statcounter shows that Irish people use smartphones to get content more than almost any other western country, with a third of all web access here now coming from our handsets.

Even Ireland's own Television Audience Measurement (TAM) ratings organisation, which is friendly to a traditional status quo position, says that the average number of commercial spots seen per day on television has fallen by 25pc in two years, from 40 spots to 30 spots among those aged between 15 and 34 and by 26pc among adults aged between 25 and 44.

3. Xtra-vision didn't want to get into digital distribution

Xtra-vision executives often spoke of digital engagement but never really had a plan to adapt to changed consumption habits.

There were some understandable reasons for this, ranging from deals they had in place with studios around DVDs to a lack of development resources and understanding as to how they could somehow add a downloading or streaming proposition to their service.

The current owner retained a more traditional belief in the value of physical sales and shop-based trade.

4. Big movie studios didn't help traditional allies like Xtra-vision

Film studios have been determined to resist a rapid digitalisation of their products and assets.

Although this has happened anyway, they encouraged chains such as Xtra-vision to stick with a physical media model as long as possible, largely for their own purposes. To the studios, the demise of a franchise such as Xtra-vision will be publicly mourned, but privately shrugged off.

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