Microsoft announces DVDs Extinction- Hollywood + Coinstar Weep

Several years ago my friend was backing up his data on a pile of DVD's, complaining about the amount of time it was taking. "Why not just get an external hard drive and plug it in? DUH."
"Oh yeah," he answered sheepishly ... A similar complaint could not legally be made today, as he who uttered would be arrested for the crime of ignorance (also known by its common law name: stupidity.) 
The DVD is going the way of the dodo, much like floppy discs and CD's did before them.  Today, the high end laptops like the Macbook Air, or the HP Fusion don't even offer DVD drives, being deemed unnecessary, an extra weight and expense. 
But Microsoft, has sped up the process of DVD extinction, reminiscent of a Dick Cheney owned company strip mining the forested habitat of an endangered species, and for the same basic reason: Profits.  Okay, I realize this analogy is a little harsh, for Microsoft that is, but the company has nevertheless decided to disable DVD playback support from its upcoming Windows 8 operating system. 
The OS will not include built-in support for optical media playback. That means you won’t be able to play DVDs and Blu-ray discs in the default Windows 8 configuration, as Microsoft attempts to defer the cost of the decoder license.


Video: The DVD is dead

Quoting from a company statement: "Our telemetry data and user research shows us that the vast majority of video consumption on the PC and other mobile devices is coming from online sources such as YouTube, Hulu, Netflix, or any of the other myriad of online and downloadable video services available. In fact, consumption of movies online in the United States will surpass physical video in 2012."
While you can always "upgrade" and buy the Media Center package from Microsoft, or use third-party software to watch a dodo, few will.  
In fairness to consumers this move will lower the cost of new computers as it's doubtful any PC manufacturer will include a DVD player into a Windows 8 system, but it also means if I want play my copy of "Gladiator" I'll have to take my ancient laptop overseas, where Hollywood is still "negotiating streaming rights," driving many consumers towards Kazaa in the process.
Is this a big, costly bet for Microsoft to do this? Not really, I’m sure they’ve done the math and decided that the few customers lost will be more than recouped in the savings achieved avoiding the decoder license fee, plus I don't see any competing computer product that might use an OS like Google Chrome Ever having a DVD player. (The company seems to have a moral problem with physical hard drives for God's sakes)
The more interesting question: How does this affect the business models of other corporations dealing in either streaming video content or DVDs;  Coinstar, Netflix, and movie studios such as Comcast and Time Warner?

Coinstar: Has bet huge on DVDs. Right now, they have a near monopoly on rentals with Netflix having attempted to move out of the arena, allowing them to squeeze more profits  having raised rental prices by 20%. The recent run-up in share price has been largely attributable to their DVD business as they cater to the dinosaurs still roaming the earth. 
This is all fine and dandy in the short run, but the long run prospects of this business clearly look much bleaker today, as if the hurricane they knew would hit land sometime was upgraded a couple notches in strength. 
If your investment strategy is more long term oriented, I suggest that you avoid Coin Star like the plague. In a few years time those DVD Machines they have will be dispensing something else if the company is lucky.

Netflix: Reed Hastings rightly pointed out that he believes DVD revenues for his company will decrease every year and eventually disappear. Not that I ever doubted this statement, but he's been proven correct, and lends a degree of weight to his bold moves. Of course, I personally don’t agree with how these moves have been orchestrated (Quixster,) but you have to give him credit for not sitting idly by like Kodak did when the digital cameras started taking over, while they stubbornly tried to protect their their film cash cow, even when they were the ones who originally invented digital imagery.


Hollywood Studios- Disney, Time Warner, Comcast: Cannot be excited. DVDs represented easy money to the studios, and this income source is clearly drying up. And while these revenues are being replaced by the sale of digital content rights, I’m absolutely certain there movie execs are banging their heads on their desks right now, dreaming of 2005.
However, the next couple of years will be a banner for content producers of all types, as Amazon, Google, and Netflix buy original programming.


Bottom line: As quickly as CoinStar has risen, I foresee a bleak, long term future, and unless the company is able to shift fairly quickly, as it did with Red Box originally, the stock will fall sharply from its recent highs. I suggest you sell/short Coinstar, and get your DVD player ready to sell to an antiques dealer. 

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