DVD Sales Down; Blu-Ray's Missing Its Mark: What's Hollywood To Do?

This story was written by Tameka Kee.
Now it's Hollywood's turn to feel the financial crunch, and it comes in the form of an even deeper slump in DVD sales. Stats compiled from studios themselves and independent media tracking services reflect a downward trend, NYT (FRB: 066570) reports. And it has insiders like Amir Malin, a partner at media-focused investment firm Qualia Capital, on edge: "Every studio is claiming, 'We're O.K. so far,' but we've looked at the overall competitive sales data and we have some concerns."

Sales down both for the quarter and the year : According to Nielsen VideoScan, overall DVD sales were down 9 percent from Q2, and sales of higher-priced new releases were down 22 percent. Meanwhile, Warner Bros., the largest distributor of DVDs in the U.S., says sales are down 4 percent for the year. Since global DVD sales can now account for as much of 70 percent of revenue for a new film, any industry-wide decline is cause for alarm.

Blu-Ray is fledgling: Warner Bros. also says sales of more expensive Blu-Ray DVDs will miss projections by at least 25 percent this year. It's partly because consumers are still in a "wait and see mode"in a recent survey, 57 percent of regular DVD buyers said they wanted to make sure that Blu-Ray was the format Hollywood was going to stick with. So while the Sony-backed technology may have beat out rival HD-DVD, some execs say success in the 2008 holiday season is critical.  "We think this is a do-or-die time for Blu-ray. We must get it established as a favorite holiday item," said Ron Sanders, president of Warner Home Video. 

By Tameka Kee