Download movies from online
Nowadays, digital media is important for Amazon. Even though 70% of its revenue was from physical form of books, DVDs, and CDs last year, and when Amazon first started to offer online download service, it did not have big affect on other DVD sellers, but in these months, those sellers' income are cut. Because DVDs and online music download service are substitutes, so if the demand for one of them increased, the sale of the other one will fall.
In my own point of view, download music, movies, and e-books from online will become more and more important for both the customers and the online service providers. For us, the customers, we save time because we don't need to go out and buy stuff; also, download service saves us place, instead of all physical books, CDs, and DVDs, the only thing we need is a removable hard disk. Therefore, opportunity cost for watching a movie become less.
As the "price" of a movie decrease, the quantity demand of it may increase. So, the download service providers will collect more money from provide this kind of service. At the same time, this service help them to save the operation cost because those employees who used to send out goods that customers ordered from online are not necessary any more, and after they cut those people, they have more money to develop other services. The more services they provide, the more benefit customers can get.
So, will you purchase a DVD or download the same movie from online?
2 comments:
Xiaojue, when the price of a movie decreases, the quantity demanded increases, not the demand, as you erroneously state in your post.
Furthermore, whether the download service providers will collect more money by selling digital movies at a lower price depends on the price elasticity of demand. If you think that revenues will increase with the lower prices, then you must believe that demand is elastic.
I can see advantages to both sides of this debate. Downloading CD's and DVD's offline is a more convieniant and cheaper way of getting your entertainment. After a click of the mouse and a period of time to upload, you have what you were looking for without leaving your home. On the opposite side, having a hardcopy of your movie or CD is a better form of security cause you know you actually own it. With downloaded material, since it uses so much memory, after awhile it might need to be deleted from your computer to save space. The problem is that companies need to realize is definitely the prices. With prices of these goods going down, there will definitely be an increase in quantity demanded. Therefore more people will start buying in the store, rather then online as long as the price is more reasonable.
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