Module 5: Red Queens and Increasing Returns
When you decided to obtain a DVD for your science fiction
assignment in Module 4, where did you go to find a movie based on a Philip K.
Dick book? Did you rent or purchase a DVD, or did you view it digitally on your
computer using Netflix or a similar vendor of video-on-demand?
In trying to locate a DVD for my
science fiction assignment in Module 4, based on Philip K. Dick’s book, I went
to www.Amazon.com to purchase one or more of the suggested movies. It was going
to take 3-5 business, and I did not have the time because I was preparing
myself to attend my third residency. I decided to visit three major retailers:
Wal-Mart, Target, and Best Buy. The only store that had at least two was Best
Buy. As an educator and a scholar, I wanted to purchase and add these movies to
my DVD collection in order to use for future learning and teaching. The DVD
movies: Total Recall produced in 1990 and Next, produced in 2007 would not play
in my laptop computer purchased in 2006 for $2,500.00. When I got home the
following week, I immediately tried both videos in my desktop computer DVD
drive which I purchased in 2010 for $1,500.00. Unfortunately, I was only able
to access the movie Next. The journey of obtaining a DVD for our science
fiction assignment showed how technologies advance over times such as my laptop
and desktop computers. Thornburg (2009) concluded that Moore Law is prevalent
today because a trend in technologies in which the power of a technology
doubles about every 12 months and becomes less expensive to purchase. Between my job and taking courses at Walden University, I have not used Netflix or video-on-demand services for viewing movies. I only view movies for educational purposes from the library or ask a friend to borrow his/her copy.
Is the current competition between DVDs and video-on-demand an example of increasing returns or Red Queens? Justify your response with sound reasoning and specific examples.
Thornburg (2009) described
increasing returns as, two innovations hitting the market at about the same
time and by chance one technology gets locked in, and the other technology
becomes extinct. He stressed that possibly that one captured people imagination
more than the other and that the best technology does not always wins. Arthur
(1996) argued that increasing returns are the tendency for that which is ahead
to get further ahead, for that which loses advantage to lose further advantage.
For example, Thornburg cited Arthur’s
video tape recording between Panasonic format (VHS) and Sony format (Betamax).
Although Sony’s Betamax format was high image quality, and superior to
Panasonic suboptical formal (VHS), Panasonic was able to cut a deal with film
producers in converting to their format. This resulted in Sony not having the
media impact and was force out of the market by Panasonic.
Based on my analysis and examples of increasing returns and Red Queens, the current competition between DVDs and video-on-demands are examples of increasing returns and Red Queens.
Where
do you think DVDs and video-on-demand are on the four criteria of McLuhan’s
tetrad?
I think that DVDs and video-on-demand are both rotating
through each quadrant of McLuhan’s Laws of Media and battling out their
conflicts in order to stay on top of the market. For example, Netflix allows
you to select a movie anytime and anyplace. The new movies are available
quickly than DVDs. I think that it really depends on what people want at a
particular time. Heymann (2011) stressed that the SNL Kagan study, the
Economics of TV and Film revealed that consumers are now opting to sign up for
streaming and/or rental services, like Netflix. They are using video on demand
(VOD) services more and more, as they discover these services can be cost
effective.
Unfortunately for studios, according to SNL Kagan, the revenue from VOD has not yet offset the resulting drop in DVD sale revenue, which was their top earner for more than a decade now.
Heymann (2011) revealed “SNL Kagan tracked 415 titles in our database that were released on DVD in 2010, and among those titles wholesale revenue dropped by 43.9% from $7.97 billion in 2009 to $4.47 billion in 2010,” said a spokesperson. “It is important to note that this does not include Blu-ray revenue, which grew significantly in 2010. It should also be noted that this sample of the video market does not include library titles, direct-to-video titles and TV on DVD, as well. When looking at the video retail market as a whole, consumer spending only declined 10.8% to $11.86 billion in 2010.”
Heymann (2011) indicated Fox claimed victory once again in 2010 in terms of market share, thanks primarily to Avatar. The distributor had 15 titles in the study, and those titles took in $605.9 million from 30.1 million DVDs shipped.
Number one DVD in 2010,
shipping over 10.3 million units and making $207.5 million in revenue.
References
Arthur, W. B. (1996). Increasing returns and the new world of business. Harvard Business Review, 74(4), 100−109. http://web.ebscohost.com.ezp.waldenulibrary.org/ehost/resultsadvanced?sid=465bbda8-6e62-40c4-8075-1fc8504c8516%40sessionmgr104&vid=2&hid=112&bquery=Increasing+returns+AND+the+new+world+%22of%22+business&bdata=JmRiPWJ0aCZjbGkwPUZUJmNsdjA9WSZ0eXBlPTEmc2l0ZT1laG9zdC1saXZlJnNjb3BlPXNpdGU%3d
Heymann, G. (2011). Will video on demand services like Netflix
make DVDs a thing of the past?
Michele
I responded to the following community members:
Timothy Weaver
Kevin Klein
http://kklein66.wordpress.com/
Michele