DVD ends year with a whimper

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The DVD is showing its age.

Newly released figures show that DVD sales fell 9% last year, a decline that was only partially offset by the growing popularity of next-generation Blu-ray high-definition discs. U.S. consumer spending on home entertainment totaled $22.4 billion -- off 5.5% from a year ago, according to the Digital Entertainment Group, a Hollywood trade organization.

Shipments of DVDs dropped 30% in the fourth quarter, as retailers increased the shelf-space devoted to new, high-definition movie discs (at the expense of the traditional DVD) and studios cut back on DVD shipments to minimize returns.

‘Retailers saw what was happening, Blu-ray was doing great, DVD was dropping faster than expected, and they moved faster to replace some DVD with Blu-ray,’ said Tom Adams, president of Adams Media Research, a firm that specializes in home entertainment markets. ‘Everybody responded appropriately to what was going on.’

The availability of more affordable Blu-ray players helped spur seasonal sales. Consumers bought 3 million players in the fourth quarter alone, bringing the total number of devices capable of playing the high-definition discs to nearly 9.7 million, according to the DEG, which receives data from retailers. Wal-Mart Stores was a major catalyst in fueling hardware sales with a Black Friday Thanksgiving promotion, in which it sold a a Blu-ray disc player for just $128.

In a sign of the gloomy economic times, movie rentals remained stable at $7.5 billion. This suggests that worried and increasingly frugal consumers are heading to Blockbuster or the Redbox kiosks to pick up their weekend flicks, rather than purchasing the latest titles.

‘What that is telling us, consumers still want new product, but they don’t want to make the $30 investment (on a Blu-ray disc) so they’re renting,’ said Amy Jo Smith, the DEG’s executive director.

--Dawn C. Chmielewski