DVD sales falling

Hollywood has always loved the DVD. After releasing movies theatrically, the DVD, as a billion-dollar cash generator, has been the film industry's decade-long best friend. That friend may be putting on its coat and about to head for the exit. Global DVD sales are expected to plunge 7.5% in 2008, meaning there is going to be a revenue problem brewing for some of the movie studios that count on DVD sales and resultant profit as part of their business model.

It's true that the DVD format is an aging medium with the newer advent of Blu-ray, HD-quality movies and television shows that stream from the internet to a PC or a "black box" hooked to that flat-screen set and with other forms of entertainment media taking the place of physical media like DVD. Sales of Blu-ray high-definition discs have partially offset the decline in DVD sales, but they are not growing as fast as DVD is declining, thereby causing a conundrum. Many consumers simply don't see the need to "upgrade" to Blu-ray. Standard DVD is good enough for many. To entice more consumers to buy the devices, Blu-ray needs cheap players (sub $199 pricing) and movies that are priced - at a maximum - 20% over standard DVD movies.

It's all about price for the growth of Blu-ray to supplant standard DVD. Product and picture quality has nothing to do with it, unlike what videophiles would have you believe. A bright light here will be Wal-Mart Stores, Inc. (NYSE: WMT)'s introduction of a Blu-ray player for under $130 this Friday. More retailers need to follow suit, though, and slash Blu-ray disc player prices, especially in this economic environment. The also need to add more models for consumers to choose from and only then they will respond and begin switching en masse from regular DVD to Blu-ray.