In Depth
DVD Sales May Fall Further as Wal-Mart Clears Aisles
Wal-Mart’s broom may spell DVD’s doom.
Ever since Toshiba conceded the next-generation DVD war by discontinuing its HD DVD format, studios have been counting on a surge in U.S. DVD sales as customers who were waiting on the sidelines take the high-definition plunge by buying Sony Blu-ray players and renting more HD films.
The studios may be disappointed, however. Retail giant Wal-Mart is making less room for the back-catalog DVD titles that help widen studio profits while more customers either download high-definition films or order them on-demand from cable companies, according to one analyst.
“While the consumer perception of a DVD’s value is likely to be improved by eliminating dump bins, studios that have relied heavily on deeply discounted catalog sales will be negatively impacted in 2008,” wrote Pali Capital analyst Rich Greenfield in a note to clients this week. Mr. Greenfield estimated that U.S. DVD sales will fall as much as 5% this year.
Last year, U.S. consumer spending on DVDs, which started tapering off in 2005, fell 3% to $23.7 billion, according to trade group Digital Entertainment Group. At least two studios said during last month’s earnings calls that high-definition DVD sales would triple to about $1 billion this year.
Wal-Mart, which doesn’t disclose DVD sales, said last month that sales for its most recent fiscal year rose 8.6% to $374.5 billion. The world’s largest retailer accounts for anywhere between 30% and 40% of U.S. DVD sales, according to various research reports.
Additionally, U.S. cable leader Comcast and fiber-optic television service Verizon FiOS have said they’ll have more than 1,000 on-demand content choices by the end of the year, while more video-downloading services such as Apple TV and Amazon.com’s Unbox may cause DVD sales to fall further, Greenfield said.
“We are seeing an ongoing evolution in digital distribution, which cannot be positive long-term for the physical formats such as the DVD,” Mr. Greenfield said.
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Comments 3
Vidiot
Quick-go buy some DVDs! Don't let this great format fail!
Signed,
I. B. Kool,
President, Betamax Appreciation Society
Founder, Videodisk Owners Club
Member, Zepplin Aficionados Group
Owner, '59 Edsel
"4x3 rules!"
Shelly Jacobs
I wouldn't be so fast to dismiss in-store unit DVD sales, and soon in-store DVD manufacturing on demand. As convenient as in-the-home on-demand is, the experience of going to the store is something to do, a social event, and an opportunity of new discovery as every second the customer gets to examine the eye candy of new box art and make a purchase decision. And remember, such DVD availability gets the prospective customer into the store.
"Just want to buy those $1.00 public domain bin DVDs? That's OK, we will carry them because you are bound to buy a few other items while here. How about batteries, printer paper, that iPod you always wanted, or that portable air conditioner?"
ADayLateADollarShort
To Vidiot/I.B. Kool,
Werent you a Board Member of the Lazerdisc Association? And didnt I see you @ a 3DO convention a few years back? We had some stock in Divx, no? Our ancestors both bought return tickets on the Titanic, too! Great post!