This article is coming out Monday. Blu-ray sales are set to double
this year, while DVD sales are actually in decline. Of course, this is
to be expected with the transition from Standard Definition (SD) DVD
to High Definition (HD) Blu-ray. Blu-ray is still a fraction of the
DVD market but the fraction is increasing and the transition is
starting to happen at a faster and faster rate. Nobody ever expected
Blu-ray to totally replace DVD instantaneously, except some xflop
fanbitch/HD-DUD retards. The transition rate that is occurring is very
satisfactory to the studios and Blu-ray beneficiaries. This is with
Wall-E and Dark Knight still ahead, plus recent remastered Disney
classics like Snow White and Cinderella in Blu-ray, and with the
Matrix and Lord of the Rings in a few months.

http://www.videobusiness.com/index.asp?layout=article&articleid=CA6606149&desc=t
opstory

DVD drop pales in comparison to market
Q3 sales declined 3.5%, but studios optimistic for holidays

OCT. 20 | Consumer spending on sales and rentals of home entertainment
softened in the third quarter but by an encouragingly modest amount,
given the dark economic environment, according to studio executives.

Year-to-date through Sept. 28, sell-through spending on all formats
slipped 3.5% from the same 2007 frame to $8.58 billion, according to
Video Business research. Disc rentals dropped 1.2% to $5.66 billion,
according to VB research and Rentrak. Taken together, the entire
industry fell 2.4% to $14.25 billion.

The declines were driven by DVD sell-through, which was off by about
6%, according to some studios. Blu-ray Disc sales, in contrast, grew
200% to nearly 300% from a small base, according to studio estimates.

Blu-ray revenue and unit sales are each pacing 200% over last year,
according to Sony Pictures Home Entertainment. Several executives at
different studios said they expect the new format’s growth to be
strong enough in the fourth quarter to pull rental and sales for the
full year even with 2007, despite economic challenges.

“Considering the bad economic news that is all around us, Blu-ray
sales continue to grow at a phenomenal rate,” Sony worldwide president
David Bishop said. “You cannot find any consumer electronics product
or new delivery system that is performing at that percentage growth
rate.”

Despite nationwide signs of consumer softness, including September
retail sales that fell by their largest monthly amount in three years,
according to the U.S. Commerce Dept., Bishop and other executives
continue to bet that Blu-ray title revenue will reach $1 billion by
year’s end.

Target is among retailers devoting significantly more room to the
format in recent weeks at the same time of this overall retail slide.

“It’s the primary growth for the DVD category, and retailers are
stepping up to take leadership positions because they don’t want to
fall behind,” Universal Studios Home Entertainment president Craig
Kornblau said. “As related to sales, a disproportionate amount of
space is going to Blu-ray, but [stores] want to make a bold statement
to their customers.”

Paramount Home Entertainment worldwide president Kelley Avery said she
is pleased with both new and catalog Blu-ray releases. One of the
year’s heftiest films, Paramount’s $318 million-grossing Iron Man,
sold more than 500,000 units on Blu-ray in its first week in stores.
To date, the studio’s Sept. 2 Blu-ray release of Transformers has sold
more than 200,000 units, which is respectable considering the studio
had already released the title last year on rival high-def format HD
DVD.

Iron Man sold 7.2 million units in its first week on sale in North
America, according to the studio, to make it the top debut of the
year. But Iron Man’s Sept. 30 street date put it just past the close
of third-quarter tracking.

“I think there are good signs in our category despite the fact that
other consumer goods are having a difficult go at it,” Avery said.
“You’re seeing rising costs on so many other consumer goods, but DVD
pricing is stable. It’s a great value, and a form of escapism during a
time when people are hearing a lot of bad economic news.”

Avery added, “We are cautiously optimistic about the year. It’s hard
to say what impact the economy will have on the business. But we could
be flat, to a point or two one way or the other.”

Lionsgate president and chief operating officer Steve Beeks agreed
with Avery’s end-of-year assessment, noting as proof that combined DVD/
Blu-ray spending in the first two weeks of the fourth quarter is 2%
over the same 2007 period.

“Tough recessionary times [could] keep people from buying the
hardware,” said Beeks. “Prices are coming down, but that is the only
question mark. But if we don’t get to $1 billion [in Blu-ray title
sales], we will get close.”

On average, Lionsgate titles are currently selling 10% to 20% of their
copies on Blu-ray. Last year at this time, Lionsgate’s Blu-ray portion
totaled 5%.

Aside from Blu-ray specifically, studios also found pockets of overall
strength in their third-quarter releases. Lionsgate’s Forbidden
Kingdom and The Bank Job have generated sales totaling 120% and 170%
of their theatrical box office, respectively.

Keeping with budget-conscious times, Sony’s 21, Vantage Point and Made
of Honor captured 15% more rental revenue than comparable titles would
typically secure, according to the studio.

Additionally, Sony’s Starship Troopers 3: Marauder outsold the
franchise’s second made-for-disc installment.

Universal’s second season of Heroes, hampered with fewer episodes
because of the screenwriters’ strike, has nevertheless sold more than
1 million units, commendably about 90% of its first season, added
Kornblau.

“In this tough economy, consumers might cut out restaurants and
babysitters, like they’ve done in past recessions,” said Kornblau.
“But I see DVDs fly off shelves this fourth quarter. They are great
value to the family.”

Some studios also began to talk about digital downloads as one of the
factors they look at when judging the success of a title in the home
entertainment window.

Lionsgate’s Beeks estimated that industrywide download/streaming
revenue will total $1 billion, matching Blu-ray’s expected
achievement, at the end of the year.

Universal began including download revenue into its assessment of
titles’ performance starting with Sept. 9 release Baby Mama, Kornblau
said. Lionsgate similarly began accounting for download activity
earlier this year.