Both Movie Attendance and DVDs are Slipping!

The attendance at movies theaters is failing and DVDs at home are viewed as the reason. It does makes sense, consider this: The Christian Science Monitor reports: “The number of households with at least one DVD player is rising and projected to be 80 percent by year's end. Revenue from DVD sales and rentals, which is $21.2 billion per year according to the Digital Entertainment Group, has now surpassed box-office receipts, which stands at a little more than $9 billion a year.� http://www.csmonitor.com/2005/0519/p12s02-almo.html

However, even though DVDs are indeed part of the reason, surprisingly even DVD player purchases are beginning to slip, as are the purchases of major movies on DVD. Check these reports out:

1. DVD Player sales dip. Global DVD player revenues will fall for the first time ever in 2005, according to research from the Strategy Analytics Connected Home service: “Retail revenues in 2005 will fall by 1 percent to $19.8 billion, after peaking at $20.1 billion in 2004. Higher value DVD recorders are beginning to replace players, but this trend will not prevent a continued fall in overall revenues.�

2. DVDs sales are down. Money/CNN’s Krysten Crawford reports, “First DreamWorks, now Pixar. Are DVDs sales losing their sizzle just when Hollywood needs them most? …Pixar announced Thursday that sales of its ‘The Incredibles’ DVD will fall short of expectations. DreamWorks dropped a bombshell in May when it told investors that DVD sales of ‘Shrek 2’ are softer than expected. DreamWorks shares have since tumbled 32 percent. Do two missteps make a trend?�

So, what is happening? Ticket sales are down. DVD player purchases are down and finally “DVDs are losing sizzle� with 5 million unsold copies of "Shrek 2" still in DreamWorks’ warehouse. What does all this mean?

Typically, Hollywood is criticized for not making enough family-friendly entertainment. Critics content that G and PG rated movies do better at the box office (but, like duh, of course, because G and PG permit a larger unrestricted audience). But now some analysts are wondering, in light of the shortfalls by Pixar and DreamWorks -- two studios with historically strong family friendly video sales, does this “signal that something a lot more troubling is afoot in the DVD market?� (Money/CNN).

I will have more to say about this in my next post…