Studios also say the economic downturn might actually help kindle sales of high-definition discs because the supply of Blu-ray players is likely to exceed demand sharply in the coming holiday season, pushing prices down.
A year ago, the cheapest high-definition players cost about $500, according to David Bishop, president of Sony Pictures Home Entertainment. American retailers like Wal-Mart and Best Buy are poised to sell machines at $199, with post-Thanksgiving holiday promotions pushing the cost as low as $128. Player sales jumped in October compared with the same month a year ago, Bishop said, even as most other retail categories had sharp declines.
Hollywood has been counting on Blu-ray to drive its crucial home entertainment business. After years of rapid increases, U.S. sales of DVDs fell 3.2 percent last year to $15.9 billion, according to Adams Media Research. It was the first annual drop in the medium's history.
DVDs remain a blockbuster business, but any decline is cause for concern because disc sales on a worldwide basis can account for as much as 70 percent of revenue for a new film. Blu-ray discs, which use a Sony technology that includes interactive bells and whistles, typically sell for 25 percent more than standard DVDs.
Retailers also count on DVD sales, and the biggest chains are planning to put more muscle behind the category. Chains are dedicating more shelf space to the medium (at the expense of CDs and video games) and Wal-Mart plans to spend $30 million advertising home entertainment products during the holiday season, according to several studios. Best Buy is devoting more resources to in-store displays.
This month, the presidents of home entertainment from the top seven Hollywood studios took the unusual step of participating in a symposium in Los Angeles that draped the high-definition push in favorable statistics. Regarding recent declines in DVD sales, Amy Jo Smith, executive director of the Digital Entertainment Group, a trade organization, told the audience, "In the face of the current economic crisis, this is really a remarkable performance."
Home entertainment has held its own during previous economic downturns, giving some studios hope that declines will be modest. An uptick in overall sales at Wal-Mart as the economy declines is also soothing studio nerves, although Circuit City's decision to enter bankruptcy protection poured some rain on that parade. "We're cautiously optimistic about the fourth quarter," said Bishop of Sony.
Originally published by The New York Times Media Group.
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