No Surprise: DVD Sales Plunged Over 40 Percent Last Year

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.