Sony DADC (Digital Audio Disc Corporation) has announced that they will be outsourcing the music and video manufacturing currently performed at its Terre Haute, Indiana facility to California's Technicolor Home Entertainment facility. The outsourcing will result in approximately 380 workers being permanently terminated in a mass layoff.
The 33-year-old Terre Haute facility is the last of Sony’s North American manufacturing plants. Considering the $500 million Sony has invested in the facility, it is likely that the facility will continue, to service Redbox’s DVD rental operations and produce Ultra HD Blu-ray for 4K televisions until a future date when it is speculated that the machinery will be shipped overseas and the facility closed.
Lisa Gephardt, Sony’s New York-based corporate spokesperson, has claimed that the decision to outsource operations was based primarily on the dynamics of the home entertainment market, specifically citing increased competition from streaming services such as Netflix and Hulu. "It is really that the home entertainment market is facing a decline over the last several years with factors such as increasing use of streaming such as Netflix and Hulu and a decreased emphasis on packaged media by retailers. There has been a reduction of floor space with big-box retailers, as packaged media is not emphasized as it once was. We have stayed ahead of the curve with operational efficiencies, but the decline in the home video market has caused us to make the difficult decision to change the way we operate by outsourcing.”
[Coincidently, France-basedTechnicolor Home Entertainment announced that they will be closing their one-million-square-foot Olyphant Pennsylvania compact disc duplication and packaging plant and laying off the remaining workers in 2018. Approximately 160 workers are affected. Technicolor's spokesperson, Lane Coope, said in a published report, “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.” <Source>]
This should come as no surprise as the company relied on an obsolescent physical distribution model that has been severely impacted by streaming services based of cheap cloud storage and fat pipes with an abundance of bandwidth which is becoming cheaper and cheaper.
It appears that conventional audio CDs and DVDs may be going the way of Beta, VHS, and diskettes.