It seems that each day the world is transforming into a more digitally focused landscape, with the continued rise of e-commerce greatly affecting how companies reach their customers. As a result, a lot has changed in the movie industry. What started with video cassette tapes being played in a VCR has now evolved to simply clicking play on a digital streaming service. Consumer tastes and demands continue to change, with younger audiences more interested in streaming content, rather than buying or renting DVDs and Blu-Rays, which has prompted talks to shorten the wait time between theatrical release and physical distribution to compete.1 2017 saw a 14% decrease in consumer spending on physical product, while digital saw a 20% increase in sales compared to 2016.2 However, DVDs and Blu-Ray disc sales are holding steady, and home video collections continue to grow requiring both physical and digital distribution services to make those movie nights special.
With strict promotion and release date schedules in place, supply chain precision for both physical and digital movie formats is critical. Companies such as Technicolor SA have supply chain processes in place to ensure that new releases are delivered to the right place at the right time to more than 9,000 retail locations simultaneously. Leveraging logistics services such as parcel, truckload, less-than-truckload, intermodal, ocean freight, and air freight, movie releases can be delivered on-time to distribution centers as well as directly to stores. If movies arrive too early, it creates logistical problems for store-level execution, while arriving late is an obvious issue for any new product launch.3
As the world’s largest manufacturer of Blu-Ray and DVD products, Technicolor utilizes state-of-the-art automated equipment to guarantee that release deadlines are met utilizing nine million square feet of global distribution operations. Each day, over 5 million units are picked, packed, and shipped in North America.4 Similar companies such as Deluxe Entertainment Services Group, deliver over 400 DVD and Blu-ray SKUs and over 60,000 digital files per month.5 With demand for physical formats holding steady and growing for digital, the need for efficiency in this area is critical.
Are Physical Movies History?
In the not-too-distant past, consumers spent their Friday nights wandering the aisles of their local Blockbuster looking for their favorite movie to buy or rent. However, with the dawn of internet streaming and on-demand services, have physical copies of movies become obsolete? According to Elaine Singleton, VP of Supply Chain for Technicolor, the demand for physical packaged media is still stable and is not diminishing as rapidly as many predicted.
While demand has gone down slightly, over a billion optical discs are still produced each year, but manufacturers need to continue to identify and understand key trends that may affect future demand for physical home video formats.6 With companies like Sony Digital Audio Disc Corporation (Sony DADC) distributing more than 900 million units every year, the shift to digital distribution has required manufacturers to migrate to meet the demand of these new outlets and customers. Every week, Sony DADC is delivering up to 4.3 million files to 550 digital service providers (DSPs) worldwide.7
Supply Chain Sequel
The landscape for the movie supply chain is ever-changing for both physical and digital distribution channels. With this being the case, it has become increasingly important for manufacturers to partner with 3PL providers who can tailor distribution and transportation services to meet their needs – as well as provide an end-to-end supply chain solution that includes the “red carpet” final-mile delivery.
An integrated partnership will increase efficiencies with faster response times, condensed inventory holdings, and reduced costs in reverse logistics.8 Because 3PLs have well-established distribution networks in place, they can provide the precision needed in this fast-paced, tight-deadline industry to address the most important intricacies and ultimately meet the customers’ needs.