“We think this is a do-or-die time for Blu-ray,” said Ron Sanders, president of Warner Home Video. The studios, along with several consumer electronics companies, are spending $25 million on a television and print advertising campaign that highlights coming releases from the Walt Disney Company (“Wall-E”), Sony (“Hancock”) and Warner (“The Dark Knight”). Underscoring the alarm, the major studios are working to push DVDs in general and Blu-ray in particular. Blu-ray discs, which use a Sony technology that includes interactive bells and whistles, typically sell for 25 percent more than standard DVDs. It was the first annual drop in the medium’s history.ĭVDs remain a blockbuster business, but any decline is cause for concern because disc sales on a worldwide basis can account for as much as 70 percent of revenue for a new film. After years of rapid increases, domestic DVD sales fell 3.2 percent last year to $15.9 billion, according to Adams Media Research. Hollywood has been counting on Blu-ray to drive its crucial home entertainment business. Bishop said, even as most other retailing categories had sharp declines. Player sales jumped in October compared with the same month a year ago, Mr. Retailers like Wal-Mart and Best Buy are now poised to sell machines at $199, with Black Friday promotions bringing the cost as low as $128. Studios say the economic downturn might actually help kindle sales of high-definition discs because the supply of Blu-ray players is likely to sharply exceed demand in the coming holiday season, pushing down prices.Ī year ago, the cheapest high-definition players cost about $500, according to David Bishop, president of Sony Pictures Home Entertainment. Studio executives prefer to look on the bright side, saying the DVD market is stronger even in decline than other media businesses, like broadcast television. “As a result, a number of consumers are sitting on the sidelines and not buying anything,” Mr. Indeed, 57 percent of standard DVD customers say they are “waiting to make sure Blu-ray is really the standard the industry will stick with,” according to an industry study released last week. There are signs that digital downloads are cutting into sales.Īnd Blu-ray discs still cause widespread confusion in the marketplace, with shoppers doubtful Blu-ray is here to stay after a lengthy format war with a rival technology. Media companies, desperate for revenue, are dumping more obscure titles on the market, leading to downward pricing pressure, according to Distribution Video and Audio, a home entertainment overstock company in Burbank, Calif. Weak consumer spending is not the only culprit. Most troubling, industrywide sales of next-generation Blu-ray discs - promoted as a high-definition technology that will restore growth to the medium - are growing but will miss sales projections for the year by 25 percent or more, according to Warner. The independent tracking service Nielsen VideoScan paints a bleaker picture, reporting a 9 percent drop in overall DVD sales during the third quarter alone and a 22 percent decline in sales of higher-priced new titles, although its data does not include results at Wal-Mart. So far, total DVD sales are down by about 4 percent for the year, with most of that weakness coming in October, according to data compiled by Warner Brothers, the largest distributor of DVDs. so far, but we’ve looked at the overall competitive sales data and we have some concerns,’ ” said Amir Malin, a partner at Qualia Capital, an investment firm whose assets include several large film libraries. DVDs propel profits these days, and there is a creeping dread in the movie capital that buyer interest is plummeting as the global economic crisis worsens. That may prove true this time around, too - ticket sales have been particularly robust in recent weeks - but studio prosperity stopped depending on box-office results a long time ago. People still crave entertainment, particularly of the escapist variety, and movies remain within the budgets of most people. LOS ANGELES - Conventional wisdom holds that Hollywood’s fortunes go up when the economy goes down.
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