Home viewing: Retail killed the video shop

The last fifteen years have seen several changes in the home viewing market, not least of which are the introduction of the DVD technology in 1996 (replacing the VHS format), and internet movie rentals and downloads shortly thereafter (starting around the same time as the founding of the online video rental company Netflix in 1997). Following these changes, the video rental stores have been in decline, and the blame is sometimes put on video downloads, cable pay-per-views and online viewing.

Looking at available data on the Icelandic video market, a pattern is evident:

Seven years after the introduction of DVDs, VHS had almost disappeared, both from the Icelandic rental and retail market. But while combined sales of DVDs and VHSs to rentals can be seen to slowly decrease (from over 100,000 in 2001 to less than half of that in 2009), combined sales of retail videos increase more than threefold over the same period. So it looks like the introduction of DVDs spawned a change in consumer pattern that doesn’t necessarily have anything to do with online viewing.

In the last year however, sales of DVDs are on the decline. That might be taken as an indicator of electronic retail taking over from the real world. Or is there possibly a change in consumer culture that runs even deeper: Do you watch movies (online or otherwise) as much today as you did ten years ago? Or have you since then discovered some other, novel forms of home entertainment?

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