DVD sales slow

Filed in archive Announcements on July 13, 2005

We recently witnessed DreamWorks animation and Pixar Animation Studios having to adjust their earnings estimates when Shrek 2 and The Incredibles sold fewer DVDs than the companies had predicted. Their stock prices plunged on the news.

The studios have been able to bank on revenue from sales and rentals of DVDs, which have accounted for 60% of the entertainment companies' bottom lines, compared to just 20% taken in ticket sales. Now, however, there are signs that DVD sales are starting to mirror the recent box-office slump.

Shrek 2 sold 35 million DVDs instead of the 55 million that DreamWorks executives had estimated. (The original Shrek sold 49 million DVDs.) The Incredibles is expected to sell 30 million DVDs instead of the 34 million projected.

What do you think is responsible for this news?

Lower overall quality of new movies dampens both the box office and DVD sales.

Netflix lowers the need to own the DVD.

BitTorrent file sharing steals away legitimate purchases of DVD's.

Consumers are waiting for either HD/DVD or BlueRay and do not want to buy now and then 'upgrade' later.

Newer VOD options are more convenient to watch than DVD.

The DVD upgrade cycle is finally over and people have finished upgrading their VHS collection.

Please tell me your thoughts.