Digital Revolution: Trading the Death of the DVD as Apple, XBox Make Downloads King
Could the DVD soon go the way of the 8-track tape and Sony Betamax? According to Deutsche Bank, the just-released Apple TV is poised to capture 20 to 30% of the DVD market. And Microsoft's Xbox Live has seen movie downloads soar 400% since its launch in November, catapulting the console to the #2 spot in online video. Who are the winners and losers as the digital revolution unfolds?
CNBC’s Entertainment reporter Julia Boorstin joins the guys for this conversation.
She tells Dylan Ratigan to hold his horses! – The DVD might die but not for 10 years. The home entertainment market is $24 billion and only 1% is digital downloads.
Jeff Macke says Julia, be forward thinking.
Julia shoots back this will be a long process. Then she adds 10 years down the line retailers will be the big losers. Wal-Mart (WMT) relies on DVD sales.
Tim Strazzini is scoffing. 10 years, he feels, is unreasonably long. In a year, Tim predicts the technology will penetrate middle America.
Julia counters the downloads take too long. In a year she says, you’re not going to walk into Best Buy (BB) and not be able to buy a DVD. In addition, she argues that Apple doesn’t even have content from all the studios. Where is Apple (AAPL) going to get all that first run content?
Jeff Macke says the trade is EMC Corp. (EMC), Sun Microsystems (SUNW),AT&T (T) and Verizon (VZ) because these companies are making the backbone, or the infrastructure of this new technology.
Eric Bolling add that he likes EchoStar (DISH) because they just signed a deal with Disney (DIS) to handle their library.
Tim Strazzini says he likes Comcast (CMCSA) because they’re in everyone’s living room. And he recommends shorting Lionsgate (LGF).
Questions? Comments?
Trader disclosure:
On MAR 27, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money tradersBolling Owns (XOM), (NMX),(DIS), Gold, Silver, Soybeans, is Short Natural Gas, is Short Corn. Strazzini owns (SNDK), (MER),(MO), (NBG), (TIN), (WMT), (YHOO)