The market for DVD and Blu-ray discs has been on life support for years, as streaming has become the technology of choice for home video customers.
In the last decade, the U.S. market for physical discs has gone from a more than $10-billion business to roughly a third of that in terms of consumer spending, according to data from the Digital Entertainment Group.
But studios aren’t ready to give up just yet. Two major players, Universal Pictures and Warner Bros., have proposed an unusual plan to stay in the business of selling shiny physical discs.
The studios on Wednesday announced a plan to team up on a joint venture that, if approved by regulators, would handle North American distribution for DVDs, Blu-rays and 4K UHD discs for new releases, library titles and television shows. The idea is to combine resources to continue selling discs — while saving money.
The joint venture is expected to operate for up to 10 years, according to a news release.
Details are sparse and the venture won’t launch until the beginning of 2021. The studios did not say what the new entity would be called, or how many would work for it, but the move is expected to coincide with an unspecified number of job cuts in their existing home video divisions.
Industry veteran Eddie Cunningham, president of Universal Pictures Home Entertainment, will oversee the project.
The idea is a direct response to the collapsing DVD market. Physical disc sales plummeted 18% in 2019 alone, generating $3.3 billion in revenue in the U.S., according to DEG’s latest report. Meanwhile, consumer spending on subscription streaming services surged 24% to nearly $16 billion.
Yet physical discs remain important to some consumers, including fans of classic cinema. Not all titles are easily available for streaming. Also, though the category is shrinking, it remains an important source of revenue for the industry.
“The physical business is still an important and active category for the industry,” said Ron Sanders, Warner Bros’ president of worldwide theatrical distribution and home entertainment, in a statement.
The planned joint venture “presents a significant opportunity to continue to work with our retail partners to ensure the format’s strength and sustainability for years to come,” Universal Chief Distribution Officer Peter Levinsohn said.
Additionally, Warner Bros. and Universal plan to save costs by splitting up international DVD releases by country.
Los Angeles-based Universal will take on distribution of Warner Bros. discs in Germany, Austria, Switzerland and Japan, while Burbank-based Warner Bros. will handle Universal’s sales in Britain, Italy, Belgium, the Netherlands and Luxembourg.