DVD revenue plummets 44% in 2010, SNL Kagan study says

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With consumers increasingly switching to low-cost rentals from Netflix and Redbox, digital downloads and high-definition Blu-ray discs, revenue collected by studios from DVDs dropped 44% in 2010, according to a new study released by SNL Kagan.

The data reveal that wholesale revenue from DVDs in 2010 was $4.47 billion, down from $7.97 billion in 2009 and a high of $10.13 billion in 2007. The drop comes despite an 18% increase in the number of titles released by studios, to 415. However, the average number of units sold per title dropped by more than half, to 545,000, from 1.14 million in 2009.

Some of the decline is the result of other alternatives that make the studios as much or more money and were not accounted for in the SNL Kagan study. Consumer spending on buying and renting Blu-ray discs, for instance, rose 53% in 2010 to $2.3 billion, according to data from the industry trade organization Digital Entertainment Group. DEG also said that consumer spending on video on demand and digital downloads increased 19% to $2.5 billion.

A spokeswoman for SNL Kagan said the research firm will release separate data on Blu-ray sales soon.

DVD sales, however, remain the largest segment of Hollywood’s critical home-entertainment business, and the drop in wholesale proceeds has hurt studios’ bottom line. Walt Disney Studios, for instance, reported a 14% drop in home-entertainment revenue during the first three months of 2010, while the same segment for Universal Pictures fell 24%.

‘Avatar’ was the top-selling DVD of 2010, according to SNL Kagan. It sold 10.3 million units and generated $207.5 million in revenue for studio 20th Century Fox. That was less than the No. 1 DVD of 2009, ‘Transformers: Revenge of the Fallen,’ which sold 11 million copies, and 2008’s top title, ‘The Dark Knight,’ which sold 12.4 million DVDs.

The other top-selling DVDs of last year were ‘Toy Story 3,’ with 10 million copies; ‘The Twilight Saga: Eclipse;’ at 8.3 million; ‘The Twilight Saga: New Moon,’ with 7.9 million; and ‘The Blind Side,’ at 7.7 million. The top 10 was rounded out by ‘Despicable Me,’ ‘How to Train Your Dragon,’ ‘Iron Man 2,’ ‘The Princess and the Frog’ and ‘Alice in Wonderland.’

-- Ben Fritz