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Reports of DVD death greatly exaggerated

September 16, 2008 |  5:44 pm

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Online sites YouTube and Hulu stream billions of videos every month and attract millions of viewers, but when it comes to buying movies and television shows, consumers are still decidedly old school.

A new report from market researcher NPD Group shows that $8 out of every $10 spent on movies goes to buying and renting DVDs.

The findings, presented today at the DisplaySearch HDTV 2008 Conference in Hollywood, indicate that 41 cents of every dollar the consumer budgets for movies and TV shows goes to buying a DVD, and 11 cents goes to purchasing a season's worth of TV shows on DVD.

An additional 29 cents out of every dollar is spent on DVD rentals, which suggests that Blockbuster isn't about to go out of business anytime soon, despite the growing popularity of Internet video.

By contrast,Ctlogo digital rentals and purchases, through services such as Apple Inc.'s iTunes or Amazon.com's new online streaming video service, account for just 0.5% of consumer spending on renting or buying movies and TV shows. The results were based on a survey of more than 11,000 consumers and balanced to reflect the Internet-connected U.S. population age 13 and older.

"I think there's a big difference between looking at things on YouTube or getting the content for free online versus paying to watch a movie or a television show," said Russ Crupnick, NPD senior entertainment analyst. "My guess is it's going to take some time for people to latch on to that behavior."

That's not to minimize the strong growth of video-on-demand services or digital downloads, said Danny Kaye, executive vice president of 20th Century Fox Home Entertainment. Apple, for example, said in June that its customers were renting and purchasing more than 50,000 movies every day through iTunes.

Nonetheless, plasic discs continues to rule the day, in part because habit still trumps hot technology. For a majority of Wal-Mart Nation, it's still preferable to pick up a DVD at a local retailer or supermarket than to spend a couple of hours downloading it off the Internet.

Although DVD sales are likely to remain flat this year, Kaye believes spending on new, high-definition Blu-ray discs will restore the studios' packaged media business to growth within two years.

-- Dawn C. Chmielewski

Photo: Gary Gardiner/Bloomberg News

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