Report predicts disc downturn in '07
By Jennifer Netherby -- Video Business,12/27/2006
DEC. 27 | Declining DVD sales at electronics retailers Best Buy and Circuit City could be an early warning sign of a downturn in the disc business in 2007, a new analyst report warns.
The report out last week from Pali Research analysts Richard Greenfield and Mark Smaldon predicts that 2007 will be the first year that consumer spending on DVD will decline in the U.S.
The analysts expect home video sales to slow to $23.4 billion next year, down 1% from $23.6 billion in spending expected this year. The analysts expect the downturn to come on the sell-through side of the business, particularly in catalog DVDs.
The analysts base their conclusion on declines in disc sales at the two largest electronics retailers over the past four quarters. Best Buy has reported DVD declines in three of the last four quarters and Circuit City has reported DVD declines in two of the last four quarters.
Studio moves into digital downloads and greater emphasis on the video-on-demand business could further depress DVD sales, the report warns.
“We believe the studios should be selling digital downloads at full retail pricing or creating a premium priced digital download/VOD experience closer to the theatrical window,” the report states. “However, we are concerned about the long-term damage the industry could incur from expanding the rental market via digital downloads (that expire) and/or video-on-demand.”
In an October report, the researchers warned that low pricing on downloads could eventually lead to studio pressure to lower pricing on DVDs rather than lose shelf space. If that happened, the researchers don’t believe digital download sales would be enough to make up for lost disc revenue.
The analysts don’t believe sales of high-definition discs will be substantial enough to improve studio revenue next year.
They also warn that the downturn could continue into 2008 unless high-def discs or digital downloads take off.
Post a comment Return to article View other article discussions
| Submitted by: | Stank Dookie (boocoobaby@hotmail.com) 12/29/2006 9:13:05 AM PT |
I don''t think DVD''s are going any where. The problem today are the lame movies coming out of Hollywood. Everything coming out any more is a remake of some kind or a sequal to something long forgotten. Not to mention the 20 different ultra special, special, special directors cuts of movies that are no different than the last version except an extra 2 minutes of useless footage. People are getting tired of this stuff. If Hollywood really wants to see a change in movie sales, be it tickets at the box office or home video, they need to step up there production value. Just because a movie cost 50 billion dollars to make & has some nifty special effects doesn''t mean it''s good. We need to get back to good story driven films. We need movies where we actually care about the characters, & want to follow a certain actor through their career & into there next movies. All actors are any more are pretty faces, no one really cares about them.
Anyway, I''m getting off subject. If you want to see a sales spike, that''s the problem you need to fix. Otherwise I don''t care if it''s downloads, HD/Blue Ray, DVD, or VHS, they''re all gonna fail.
Post a comment Return to article View other article discussions
