For the first time since DVDs became a part of our entertainment experience, sales may be dropping, putting pressure on profits in the entertainment industry.
While some movie releases make some money for media companies, it's been the DVD that has brought the majority of profits, as complex deals and financing siphon off most the earnings from the movie releases themselves; assuming there are any earnings in the first place.
Last year the rumblings of a slowdown in sales began, as they were flat, coming in at about $16 billion. Through the end of November sales are down by 4 percent so far this year. Even after Christmas sales, a drop of 2 percent is projected for the year.
Alan Gould, an analyst with Natixis Bleichroeder, says "Blockbuster films are generating fewer DVD unit sales than in previous cycles. Where a big picture used to sell 20 million units, top movies now struggle to reach 10 million units."
Gould added that big box office hits aren't guaranteed to be a huge DVD hit, citing "Spider-Man," "Fantastic Four" and "Shrek" sequels as having underperformed in that regard.
A number of analysts feel the industry relied too much on sequels, which is one major reason for the drop in DVD sales.
Of course the problem the industry had with films was the drop in people attending theaters, so they had to come up with guaranteed blockbusters to continue driving revenue, thus the sequels. Even so, less people attended movies, while overall gross sales increased because of raising prices, not because more people were going to the movies.
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