So Much Trouble On My Mind
Monday, January 16, 2006 | Dylan JovineSo I'm going to tackle each of my subjects one at a time...kind of like financial "stream of consciousness"...
Last week, we invited all of our readers to settle a heated debate Todd and I have been having about the future of DVDs.
Surprisingly, the vote was as close as any I've seen since Gore v. Bush in 2000.
Here was the breakdown:
TOTAL VOTES: 852 (100%)
DYLAN VOTES: 396 (46.4%)
TODD VOTES: 347 (40.8%)
DRAW VOTES: 108 (12.6%)
Some thoughts on what I learned this past week...
1. RED STATE, BLUE STATE: It seems that the country is as divided about this subject as it was for the Presidential election in 2000.
But the divide for red state, blue state isn't based along political lines - it's based along technology lines.
Many of the people who voted for Todd (the future of DVDs) did so in large part because they don't have digital cable in their rural hometowns or they live in other parts of the world.
In contrast, many of the folks who voted for me (digital cable), live in larger cities or areas where digital cable is in the home.
It doesn't explain every vote but it was very interesting stuff, really.
2. THE WORLD DOESN'T REVOLVE AROUND ME: I know, I know...it was a hard pill for me to swallow also, but it's true - I don't have all the answers.
Let me explain:
At least 75% of the FIRST votes that came in last week were for me.
So what did I do?
After sending everyone on our team an email declaring my imminent and complete victory, I quickly drove over to Todd's
house as I debated whether to rent a plane with a large "MISSION ACCOMPLISHED" banner behind it.
When Todd asked why I was standing in front of his house looking like a homeless idiot (I had forgotten I still had my gym clothes on,) I told him I was kicking his butt in the voting.
"It's still early," he said as he got ready for his weekend ski trip.
By the next morning (Saturday,) I awoke, hopped on the computer hoping to extend my lead by a large margin and was shocked to find that Todd had pulled up and now had more total votes than me!!!
I was stunned...I immediately called Todd and said, "Dude, this may be a tighter vote then I thought."
Todd casually said, "It's still early," and got off the phone.
Now I've been friends with Professor Friedman for many years. And the truth was that his calm demeanor was unusual and quite scary!
Sunday was the worst day possible...I felt like Henry Hill at the end of Goodfellas as I watched the GIANTS get clobbered by the Panthers while the votes still kept pouring in on my TREO for Todd.
Fortunately, by the time we went to press, I was ahead in the voting.
I must confess, I was relieved – thankfully, I regularly take several of the judges duck hunting.
In the end, Todd called me up and sang, "I got you...kind of, I got you...kind of" and he was right.
A few weeks ago I wrote the following words on the subject of Google (Volume 2, Issue 79):
"Google now has real competition for the very first time, and will likely see growth and profits slow as a result.
This is reason to sell the stock if you own it.
Google MAY lose deals like the one with AOL, which will hurt it much worse than the company will admit.
If this happens, it's reason to short it."
Of course, I expected to get beat up a little bit, but I didn't know that my new nickname would be "TARGET."
Folks, take it easy!
I know Sergey and Brin can do no wrong, but ever since I wrote those words, I feel like there's been a GOOGLE hit taken
out on me.
Now I'm not saying that I really mind the criticism. The truth is that inciting riots is easily the favorite part of my job.
But writing me every time the stock of the company moves up or down just proves to me you have too much time on your hands.
Let me explain.
There's a guy out there who literally writes me EVERY TIME Google stock goes up $10 or more (never when it goes down, of course).
I hate to break the news to you, dude, but when Google goes up $10, that is a whopping move of -- YOU GUESSED IT - TWO PERCENT!
That's like a stock selling for $4.50 that moves up 10 cents - NO BIG DEAL.
At the end of the day, it's percentages, folks.
But, I do have to cede the following point to this overeager young man with too much time on his hands (boy, do I feel sorry for your girlfriend):
I read an article recently that said, "Scientists say dolphins can count!"
Naturally, this attracted Wall Street's interest as I heard they IMMEDIATELY sent dozens of recruiters to SEA WORLD to get their opinion on Google...
Using the new "Dolphin Math" from their newly recruited analysts, Wall Street has come to the conclusion that Google will rocket to $600 per share.
Naturally, that should make you happy, my dear boy.
(Of course that would be like a $4.50 stock going to $6.00 - a respectable move, but not worth printing. I remember Newbridge Networks going from $8 to $160 in the 1990's. Now, THAT WAS A FRIGGIN’ MOVE. That would be like Google going to Berkshire Hathaway levels.)
Is there a doctor in the house?
I read recently that banks and insurers were beginning to price the Avian flu into their risk models.
That's when you know this is real.
When I went to see my doctor (Dr. Vinny Boom Bots) in Miami recently, I asked him about getting some of the treatment that I hear is around to "cure" the Avian flu.
He told me I was being paranoid (and then asked me if I noticed anybody standing outside his office who looked suspicious.)
Perhaps I am a bit of a neurotic freak, but is there medicine I could take for this?
"Brazilians Are Energy Independent!"
Perhaps the single most SHOCKING thing I read this week slapped me in the face on Monday morning right on the cover of the Wall Street Journal.
Right there was the headline, "As Brazil Fills Up on Ethanol, It Weans off Energy Imports."
The article went on to say that Brazil has developed a low cost energy source to GAS using Sugar.
Hate to dip into the political arena, but I've always believed that the #1 way to stop terrorists was to create jobs for the kids that become them.
In fact, I think $60 Oil prices have done more to stop terrorism than any policy ever taken by any administration (conspiracy theorists who have wondered why oil has gone up after we just turned Iraq into our very own Gas Station, this is your cue.)
But an even better policy would be for the U.S. to become energy independent and leave the politics of that region forever.
Not knowing anything about the subject, I was shocked to see that BRAZIL is actively making energy out of sugar!
I DIDN'T EVEN KNOW THAT WAS POSSIBLE!!!
Isn't it time for our government to challenge our country - a'la JFK and the space race - to become energy independent in the next 10 years???????
TYCOON IDOL I - THE FUTURE OF DVD's:
"DVDs are not going die, they are already dead. I'll bet Todd has a fantastic LP record (remember those) collection as well."
-- Michael K.
"I hate to break it to Todd, but not only are DVDs going to be doomed by "on-demand" and "i-tunes" for movies, but the new disc standard "Blu-Ray" is going to make DVDs obsolete within five years.
Blu-Ray discs allow movies to be shown in native 1080i that's TWICE the resolution of standard DVDS, PLUS THEY HAVE INFINITELY MORE STORAGE CAPACITY THAN DVDS."
--TT
Todd's got it right for now. Why pay $4 to $5 for one showing when I can buy the DVD at discount and watch it whenever, or better yet, take the movie out from the library? Perhaps the future for digital looks bright, but it ain't here yet."
--Frank H.
Dylan, "You'll be right, eventually ..In the end, it will be searching the li brary of your 'Tivo' or
hard drive for that 'special' movie you downloaded and saved."
-- Steve L.
"Dear Dylan, The only thing that will be left spinning soon will be the globe.. Who can possibly think things are set to stay and not move forward? This guy would have been good at the end of the last century stating that ‘everything that was worth inventing had been invented.’ Cheers"
-- Andy P.
“Hi There: Most new movies suck. I just saw on my Hotel Cable channel Some Like It Hot with Marilyn Monroe, Jack Lemmon and Tony Curtis. Compare that with Angela Jolie, a violent shallow vamp. Who'd you rather watch?
Dumbed down kids think Jolie is hot, but deep down, they are voting with their feet. They don't pay $10 rip-off dollars for crap at a theater, where they don't even let you bring in your own food. Total Bullsh*t. Why do Americans put up with that at all?
But, you are both forgetting that America is NOT THE CENTER OF THE UNIVERSE. 400 million Indian and Chinese up and coming middle class folks don't have cable. Maybe someday, they'll all have satellite, but for now DVDs are it.
I don't own a TV but live in a hotel in Thailand. Don't watch much TV--got rid of my cable years ago, since it shows mostly junk or government propaganda masquerading as news.
The best thing you could do to get back your freedom is to tell the cable companies that the AD FREE service they promised when cable started is BS and content stinks and to hell with them.
That said, there are two different markets, and both will survive. Dylan's point about lazy Americans not even wanting to get off the couch is true, and I'd love to know the company that makes the data storage boxes."
--Eric A.
"If the Bird flu hits in a major way, I think any major theatre chain (and even Blockbuster) would be a short sell and Net-Flix and the On Demand companies will be great buys."
--David C.
"Time is short and money is long!!! On demand is the future."
--Brad G.
"Rarely are things defined in absolute black and white terms, except for the death of BetaMax and eight-track. I do not predict the death of DVDs, but their scope will be limited in the long run. What will win out in the end is CHOICE, whether through market forces or regulation. Both the DVD and digital
delivery have a home.
Non-DVD Movie Access Mix (via satellite, cable, or web)
- Any title at any time broadcast for "live" viewing
- Specific titles at scheduled broadcast times
- Download for single use (self-destructing files)
- Download for multiple use (self-destructing files)
- Download for ownership, unlimited use and cross-platform migration (permanent)
Multiple "subscription" plans for different types of users and formats.
DVD Movies
Sorry, Dylan, people still buy VHS and cassette formats 25 years after their mass-market introduction. Heck, audiophiles sparked a vinyl resurgence in audio, albeit a small one. I do not see DVDs disappearing for a long time.
And sorry, Todd, the market for movies on DVDs will follow the lead of music on CDs -- a gradual path to digital surrender. DVD purchases will be limited to those who are slow to adopt technology and then will be a niche product for collectors, those who choose not to live a digitally connected lifestyle and those who just need the physical gratification of the product in their hands.
Sorry for the long-winded viewpoint.
Long Live The Tycoon Report!”
--Jonathan, Minneapolis, MN
"Hey, if Todd can't figure out why that window got so small, he should probably take a look at those crafty Chinese pirates.
Thank you both."
--Robert W.
"Todd --- As an accounting-Prelaw major and the ranking Republican in the Ronald Reagan campaign, I understand, and as a German (how many Germans does it take to change a light bulb --- None, we don't change anything!!!) I also had "15,000" LP's. (had- house burned down, and they are gone.) So where does that put me – Well, all may be as it be - What about real estate - guess what - there are people with their heads in the sand, and it is going to crash - I know why, because I have been a landlord for 30 years - there is a part that no one sees that will bite everyone!
People are right - cheaper isn't best - look at Radio Shack - stock down almost 20% because they are selling "cheaper" stuff! (Read the financial notes.)
But Todd, Americans want it "NOW" and most of the time what they "think is better"! (Don't own any 8-tracks - oops - probably not old enough as most Wall Street Guru's)!
I have never owned a DVD!! (by the way, what does that stand for?) But I have "cable on demand". Todd, I like your numbers except --- ! There are a lot of people who are going to skip the DVD life (Paul Harvey - the rest of the story,) so they are done!! Why?? Which are Americans going to do? What they have to pay
for now - or later? DVD and equipment they have to pay for now where on-demand comes in their bill later. (not that they can pay it - which leads to which stock to buy) (Dylan - Not Blockbuster!)
By the way, Dylan, I love your attitude, but I like "Sister Act II" better than one! Some times we need to take another step beyond which you do well," but it comes down to one simple thing:
"They put the gum ball machine there for one reason; not because it is good for you, but to get your quarter for their life style so you don't have one!"
--David W.
"I vote for Dylan....people pay $20 to $40/month now for HBO, etc....why not pay one fee to watch the movies you want when you want!"
--Tony D.
"D.P. Jovine has the greater vision and his conclusion is related to human behavior at the gut level."
--David H.
"I figured out a long time ago that my public library has thousands of films on VHS tape and DVDs for free (not really free, I pay my taxes). Fortunately, my county's public library system has been rated number four in the nation. I know someone who belongs to Netflix and collects $2.00 for each movie he rents out (to his friends and relatives)--he actually makes money by subscribing to Netflix. I think Blockbuster is a goner and movie theaters will never be the same--I can't see the movie studios passing up the DVD business when millions of people have players that they're not going to throw away. Movies on demand is yet another charge when people I know are complaining about their cable bills and satellite TV costs and mobile phone charges."
--Rmassp
"DVDs are here to stay, because one CAN'T see ANY movie at ANY time! People are collectors, want to take their content, say "camping" where no cable access is available.
Present "hardcopy" content can't be censored by future broadcasters or V chips in receiving devices. Books are still here after centuries even though other media duplicates their content, etc., etc., etc."
--Richard B.
"Dylan...UR correct..people want comfort more than ownership. A DVD collection is a lousy investment of both time/space and money. Movies are fantasies to be enjoyed and forgotten, or at least relegated to a cyber library. In fact, the day you can download your newest editions of books, you may even stop going to the bookstore and simply cyberbrowse and download to a digital reading device or listen to an audio book on an Ipod. Why have a personal library when there is nothing more personal than a digital download--reading is not a tactile event unless, of course, one is a palm reader. Todd seems like a fine, reasonably though not practically intelligent person. He is thinking like the owners of the film studios and not like the consumer who creates and decides what will be the market. And if there is a market/demand, then someone will fill it. Keep up the good work."
--ER in Malaga, Spain.
"At 55 years old, I have never owned a DVD (or DVD player, or VCR, or BetaMAx, or TV). So I have no understanding of how the rest of America thinks. So I have to abstain."
--Stein
"What am I going to do with my DVD player? Put it with my 17-inch monitor?"
--Stephen Z.
"Just like VHS, DVDs will go by the wayside. To keep people spending money, you need to change to new formats every few years."
--Edward H.
"I'll have to give this debate to Friedman. I live in rural America. Cable service sucks. I like surround sound and have a sweet system, and cable just does not deliver even when they claim that they do. Big difference, listening to a movie on DVD vs. Cable. I have a Direct TV dish now. Great. However, the house is prewired and no telephone jack next to the TV. Therefore, can't order movies. Nor do I intend to tear up the house to install a phone jack. However, I do see DVDs becoming much smaller than they currently are. I see the price for these coming down as well. And since our manufacturers (TV makers) are reluctant to move into the modern age without Congress having to pass a bill, I don't suspect there is a lot of incentive for giving rural Americans better service. As to TV's, I'm referring to Congress having to pass a bill to ensure manufacturers are digital compliant. That's absurd. What happened to innovation and free trade instead of having to be dictated to that you will move forward? Something is very sick about the manufacturers in this country, so long live Japan and other countries. Love my BMW, and American corporations can take their cars and shove it, except for Dodge trucks. Sweet! Therefore, I see no incentive for change within the next five years of doing away with DVDs. Look how long it has taken to do away with that stupid floppy drive on new computers, and many computer manufacturers still install that stupid 3.5-inch floppy drive, even today. Nope, Dylan, you lose. When was the last time you went to a rural theater? The sound system sucks, and many times, the picture is fuzzy! Get out of the big city and visit what I call the majority and what we have to live with. Or you get to go to one of those new 10 theaters all rolled up into one building and have your hearing impaired as the sound is so loud, it gives you a headache. So, screw the theaters! Give me a DVD, for now, anyway. Blockbuster is a pain! I suspect some Japanese or Chinese company will come up with a better idea in the future. Not the US companies. Love my foreign investments as well. What would really be sweet would be holographic projection with true surround sound. Now, that would eliminate DVDs and TVs and give an experience that would blow one's mind. Hmm, wonder who can make that happen - Google? Imagine a true 3-D experience and true surround sound experience? Ok, so I was born about 200 years too early.
Don't get me wrong, I love the US. Best country to live in, excluding current political idiots in the White House and stupid policies. However, we have lost something over the years, and it's called hard core education of our kids!"
--Dennis
"Life is what YOU make it - live and let LIVE!"
--KAT
"Short time frame, Todd; Intermediate time, frame Dylan. In the long time frame, some newer technology will come along and replace both of these. Thanks for the articles."
--Jim
"I vote for Todd.
1) Most people want something tangible in return for payment (Even if it leads to unwanted clutter)
2) The selection is better and more familiar with DVDs.
3) The DVD is more versatile, can bring in car, with PC, or to country where high speed downloads are not as widely available."
--PL
"While all the hoopla about on-demand cable content is interesting, you seem to forget about one small niche. Those of us who do not have cable. I enjoy owning the DVD and being able to watch it anytime I
want, FOR FREE, after the initial purchase. Many consumers with cable will also own DVDs because of the cost of watching over cable."
--Boyd
"I've never purchased a DVD - nor do I plan to. I'm not a Hollywood lover, to say the least, but I have to go with what's easiest and takes up less space - DVDs will go bye-bye!"
--Leland
"Although I agree that what you say makes sense, nevertheless, I believe that you overestimate the human condition. Until the day arrives when we are no longer "hoarders" by nature, always " inventorying "...
which comes from a basic fear that there isn't enough to go around, therefore we might not have enough to meet our individual levels of greed, I think people will continue to want to own things. Anything less will make them feel vulnerable."
--David B.
"Unfortunately, that is why most of us have expanded our...waistlines! Things have become too easy, allowing us to stay sitting and do nothing but push a few buttons on the remote and have everything we
want at our fingertips. But you are right! We will stop going to the movies and stop going to the video stores and all very soon. Netflix is already showing us that the opportunity is there for the ease of watching all these movies at home. And for a very reasonable price. I think you have nailed this one, Dylan!"
--Andy B.
"Cars with entertainment systems and kids, basically kid entertainment, home or travel, is going to need DVDs, but I agree that there are few movies worth owning, even if you like them. How many times do you need to see it, but that hasn’t stopped people from buying since nobody knows how to read anymore. Thank Teeka for the oil tips; I did well last week."
--Gordon O.
"Sorry Dylan. People like to touch and handle things. My two sons’ favorite Christmas present this year was a portable DVD player. They like to lie in bed and watch it at all hours of the night which is OK with me as long as they don’t need to get up early for school. Also, packaging sells. DVD packaging is nice and pretty. It sucks you in, and you can’t replicate that with On Demand. Also, car DVD players are becoming a real big deal for families that travel a lot. I know, we do, and let me tell you from experience that it REALLY
works. My kids aren’t punching each other out when they’re watching Raiders of the Lost Ark or Finding Nemo. They do that later, but at least it’s out of the car and not when I’m going 75 on the way to Disneyland or Aunt Cyndi’s.
Now, I must make a confession. My MBA wife, who is WAY smarter than me, likes On Demand better. She completely buys into your premise and likes the ease of use and the fact that Blockbuster is taken
out of the equation. But, she’s wrong on this one, too, and just proved it to me. She just bought a 10-pack from Disney for some outrageously cheap price, so see, she’s even a sucker for packaging and price. You also can’t give On Demand away as a Christmas or birthday gift. Sorry, Todd’s right on this one."
--Lou
"You guys are hilarious. Long live Tycoon."
--Bob B.
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Dylan Jovine
Chief Investment Officer
The Tycoon Report
