In what may come as no surprise, the DVD business has been struggling in the wake of streaming. As evidenced by a once flourishing company, Technicolor Home Entertainment Services, Inc., much of the work centered around DVD sales, from production to shipping and everything in between, has seen a decline. The recent Technicolor layoffs in 2018 will be a coup-de-grace of sorts for the company’s plant in Olyphant, where it once employed around 4,000 workers about a decade ago but will now be shedding some of the last few. A Technicolor sales decline has long been brewing as the company has seen DVDs fall out of favor, replaced by online streaming with more and more digital options opening up.
The Technicolor job cuts in 2018 will hit the one-million-square-foot Olyphant compact disc duplication and packaging plant.
The Technicolor layoffs in 2018 will see 160 employees cut, starting on March 17.
“In an ongoing assessment of market conditions and operational requirements to remain competitive in our key areas of business, Technicolor will be ceasing packaging and replication operations at its Olyphant facility,” spokesman Lane Cooper said in an email to The Times-Tribune.
The Technicolor sales decline saw the company drop in revenue by about 11% in the first half of 2017 compared to the earlier year, according to recent financial reports. Revenue came in at $2.6 billion.
Technicolor’s Previous Layoffs in Olyphant in 2017
While the Technicolor layoffs in 2018 represent perhaps the final blow to the Olyphant plant, the death of the facility has been anything but swift. Over the years, the cuts came in waves, shedding 4,000 workers in just over a decade.
Technicolor’s layoffs in 2017, for instance, saw 96 people cut from the production facility in January of last year, with a timeline similar to the one the company released for the newest rounds of layoffs.
The Pennsylvania layoffs both then and now impacted the community, draining funds and weakening the economy of the area while also leaving hundreds of people without jobs.
DVD Sales Decline, Netflix, and Other Online Streaming Channels to Blame
There is one name synonymous with the DVD sales decline in the U.S.: Netflix.
Netflix, Inc. (NASDAQ:NFLX) has been steadily growing over the years, from a DVD mailing service to a streaming site in the digital age, overtaking industry mainstays as time has gone on. Blockbuster and local video rentals stores were the first to go, but as streaming only continues to grow in market dominance, it stands to reason that DVD sales and other physical media will follow.
In 2016, subscription streaming video from sites like Netflix overtook disc sales for the first time, and likely won’t yield its control of the industry anytime soon. Streaming accounted for $6.2 billion in sales, while discs came in at $5.4 billion. Movie industries aren’t totally losing out with fewer DVD sales—Netflix and other sites pay for online streaming rights. But the profit margin may be thinner than home video.
Studies have shown, however, that once a company does put its media up on Netflix, DVD sales suffer in a major way.
One company found that moving its media from Netflix to a smaller streaming site jumped DVD sales by 24.7%.
Other means of watching movies and television online, like electronic-sell-through where you can purchase the product online and own it instead of streaming it from a site, have also suffered. Growth in that part of the industry was only 5.4% in 2016, down from 18% in 2015 and 30% in 2014.
The overall effect is that more people are turning toward streaming as their method of choice for consuming media. While there are trade-offs, like a streaming service potentially dropping your favorite show, in the end, people are getting more comfortable with the subscription model and are willing to let DVD ownership fall by the wayside as a result. The Technicolor layoffs in 2018 are but an extension of that industry’s decline.
“January 2018 WARN Notices,” Pennsylvania Department of Labor and Industry, January 2018.
“Former WEA/Cinram plant to shed workforce, vacate Olyphant plant,” The Times-Tribune, January 17, 2018.
“Technicolor to lay off 96 in Olyphant,” The Times-Tribune, January 14, 2017.
“Netflix is really bad for DVD sales, according to new research,” Business Insider, January 18, 2017.