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Summary:

VOD services and streaming video rentals from companies such as Netflix (NSDQ: NFLX) have been killing DVDs for the last three years, but 20…

Netflix DVD
photo: Corbis / Bryan Snyder

VOD services and streaming video rentals from companies such as Netflix (NSDQ: NFLX) have been killing DVDs for the last three years, but 2010 was a particularly bad year for sales of the shiny discs. How awful was it? An SNL Kagan study tracked 415 titles DVD releases last year and found that wholesale revenue dropped a “shocking” 43.9 percent to $4.47 billion.

That decline should come with an asterisk, since the study doesn’t include Blu-ray revenue, which the researcher says grew significantly in 2010 (no number was specified in the report, however; an SNL rep told paidContent they would check that number and we will update accordingly See update below).

On average, films shipped 545,000 units in 2010 and made $10.8 million in wholesale revenue — that’s down 52.4 percent from the $22.6 million average in 2009. In the past five years, average wholesale revenue posted a -13.7 percent compound annual growth rate.

While VOD has caught on with audiences, studios haven’t figured out how to offset the losses in DVD revenue, which was their top earner for more than a decade now.

The problem is similar to all traditional media companies struggling with traditional dollars and digital pennies and dimes, whether its newspapers or broadcasters. About the most studios can hope for as the DVD business continues its downward slide is that they’ll be able to pick up a few hits here and there.

But even hits are not enough to support the businesses anymore. For example, box office blockbuster Avatar was the top-selling DVD in 2010, shipping more than 10.3 million units and making $207.5 million in revenue. That’s not a lot of money compared to past years’ hits. On top of that, Avatar accounted for roughly 34.5 percent of Fox’s total wholesale revenue.

Update: SNL Kagan clarified its stats, noting that Blu-ray, direct-to-video titles and TV on DVD were not included in the stats. When looking at the video retail market as a whole, consumer spending only declined 10.8 percent to $11.86 billion in 2010.

  1. Kevin Moore Friday, May 13, 2011

    Yes Netflix and other streaming services has had an impact on DVD sales but I saw no mention of the bootleg DVD sales (Through the roof) which has doubled if not tripled sense they began. The funny part is bootlegs have gotten better becasue of streaming :)  Ask companies like blockbuster and West coast video they can explain it to you they have closed entire markets because of it. There is core demographics groups out there that use to be DVD buyers and renters now they are bootleg buyers. Its easy, convenient and so what if the quality is a little/lot bad at least I don’t have to be robbed by the local theatre and I can even talk during the movie J
    It’s the dude on the corner, the guy that comes every Friday with the weekly DVD releases to the office with movies that are still playing in the theater. Out of the 52% you mention bootleg must account for at least 20 if not 25%. It’s not about streaming having this huge impact this year. However later this year when Google and Apple steps up the pace. Hence google/movies.
    Forget about IT!

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  2. Here is another factor, in NYC, when Circuit City was still around movies around the city sold for as low as $13.99 when it debuted, now with less competition, new movies are selling northwards of $16.99.  Also, as for the quality of movies available, in my opinion has been less than spectacular in the last many years and compound that with the push to newer and pricier toys (Blu-ray, HD -LED’s et all) who has that kind of money? 
    Oh, last but not least, did I forget, many of us are still feeling the effects of the depression/recession.

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