Hollywood Sweats the Peak of the DVD Format

Here's the latest worry out of Hollywood:

Thanks to saturation and advances in technology, the DVD is dying. Although movie revenues are expected to be up 5 percent and a strong slate of franchise films is set for release in '07, the most lucrative part of the movie business is flat-lining.

And a few developments last week threaten to not only accelerate its death but also to take a huge bite out of the movie studios' bottom lines next year. According to Nielsen Media Research, DVD players overtook VCRs in U.S. households for the first time this year (2006) - they're now in some 92 million homes.

Taken together, Pali Research analyst Richard Greenfield is predicting that 2007 will mark the first year that consumer spending on DVDs declines domestically, which, in turn, is going to put a serious strain on movie studio profits. 'We suspect the risk to 2007 film industry profits is increasingly to the downside,' Greenfield wrote in a recent report.

Though the $23.4 billion expected to be collected on DVD sales next year trails only 2006 in dollar amount, the 1 percent spending decline that represents is a far cry from the double- and triple-digit growth experienced since 1999. Weakening fundamentals are a key reason why the studios have openly embraced new distribution technologies like iTunes and why Comcast was able to convince the studios to let it test movies on-demand, day-and-date, with the DVD release.

Interesting stuff . . .

Source:
DVD-ISASTER
PETER LAURIA
NY Post, December 24, 2006
http://www.nypost.com/seven/12242006/business/dvd_isaster_business_peter_laur