Time Warner To Help Kill Off DVD Rentals (TWX)

More bad news for Blockbuster (BBI), Netflix (NFLX), Blu-ray (SNE), and anyone else connected to the DVD rental business: Time Warner is giving the industry a shove as it tumbles downhill into irrelevance.

For months, Time Warner (TWX) has been experimenting with releasing films to digital video-on-demand on the same day as the rental DVD release. Typically, films come out on VOD on — whether it’s iTunes (APPL) or Comcast (CMCSA) — weeks after the initial release on DVD.

But on Wednesday, Time Warner CEO Jeff Bewkes declared the test a success and that future Warner Bros. pictures would come out on VOD on the same day as DVD. Why? Rentals only fell 3% to 5% for the films in the test and DVD sales actually rose. More importantly, Time Warner gets a 60% to 70% margin on electronic sales and rentals, compared to 20% to 30% a DVD rental.

What does all this mean? It means Time Warner is finally ready to start weaning itself from DVD sales, which have been Hollywood’s biggest revenue source for years. 

It also means that if Blockbuster — or Netflix, for that matter — doesn’t figure out electronic delivery, it is toast. And it means that Sony and Toshiba just incinerated a pile of money in a useless DVD format war.

See Also:  Time Warner CEO: We Haven’t Yet Integrated AOL’s Platform-A

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.