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Analysts See Softening DVD Sales

by on July 22, 2005

Analysts forecast that U.S. DVD sales will only rise 1% to 2% next year, today’s print edition of The Wall Street Journal reports. That will put severe pressure on Hollywood’s bottom line, the paper continues.

But the softening market could bring good news to consumers, the paper notes. Michael Nathanson of Sanford Bernstein predicts that prices for DVD titles will fall as the market continues to mature. Studios have recently flooded shelves with new titles, including many older titles and TV show compilations. Moreover, recent buyers of DVD players have been lower-income families, which do not purchase as many DVDs as early buyers of the machines.

Shares of DreamWorks Animation have already been hammered after DVD sales of Shrek 2 failed to live up to early expectations, and the Journal notes that the stock prices of Time Warner, Viacom, Disney and News Corp. have weakened recently as well. Sanford Bernstein estimates that DVD sales account for 18% of all revenue at Walt Disney Co. and 10% of all revenue at Time Warner.

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