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DVD Will Be Around for Awhile, Industry Insiders Say

Even with the growing popularity of video-on-demand and other new generation methods of delivering movies to the home, do not mourn the death of the DVD just yet. Entertainment industry insiders are confident the 4-3/4-inch silver discs will not be replaced in the next decade and major media conglomerates will continue to stake much of their business on their continued popularity. “Once consumers get used to owning, feeling and touching entertainment it isn’t going away,” said Stephen Nickerson, senior vice president, market management at Warner Home Video in Burbank during a panel discussion titled “The Death of The Disc?” at the day-long Future of Film conference hosted by Digital Media Wire. The DVD market is declining as they have saturated the market and the double digit growth of a few years back has slowed. The combination of DVD sales and rental was $24.2 billion in 2006, down from $24.3 billion from 2005 and $24.5 billion in 2004, according to figures from the Digital Entertainment Group, a trade organization tracking the DVD industry. Kagan Research forecast last January that sales of television shows on DVD would hit a peak of $2.71 billion in 2006 and then gradually decline over the next six years. The slowing market for standard definition discs trickles down to the manufacturers of the discs. This year, Technicolor will eliminate 1,200 positions in the U.S., including 600 at its DVD replication, packaging and distribution facility in Camarillo. Not worried Still, there is no sense of worry among the media companies. “Physical goods are going to continue to be the most important part of our business,” said Kevin Mayer, executive vice president in the corporate strategy, business development and technology group at The Walt Disney Co., who also appeared at the conference. After the introduction of the DVD in the mid-1990s and the buying public transitioned from VHS to the disc, Disney and other media companies made a transition themselves from a business model based on video rentals to one based on purchase of DVDs. Ownership of a studio’s content remains the goal in whatever form it takes. “Whether someone owns a standard definition DVD or a high def DVD in the physical media or buys through electronic delivery we want them to own our product,” Mayer said. “That’s all we care about.” Still up in the air for the studios is which of the competing next generation disc formats the public will embrace. The studios debuted films on the Blu-Ray and HD DVD formats last year. The discs can hold up to three times more data than standard definition discs. Universal Pictures exclusively backs HD DVD while Disney, Sony Pictures, MGM and 20th Century Fox put their weight behind Blu-Ray. Later this year, Warner Bros. begins selling a single disc containing both formats. That there are competing formats is a good thing in that it results in lower prices for the equipment needed to play the discs, Nickerson said. In a brief history lesson, Nickerson told conference attendees that the DVD had brief competition in its early years from the failed DIVX format and that it drove down the price of DVD players. Mass adoption of the hardware is what will drive adoption of the new format discs, Nickerson said.

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