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Walt Disney Studios executive details counter offensive against DVD industry woes

February 17, 2011 |  4:34 pm

Cheap DVD rentals, Internet movie piracy, and a sour economy: These are the causes of the storm ravaging Hollywood's home entertainment business.

Walt Disney Studios Distribution President Bob Chapek, addressing Wall Street analysts attending Disney's investor conference Thursday in Anaheim, cited all three factors as contributing to the industry-wide decline in DVD sales. And on top of that, he added, new technologies such as Blu-ray high-definition discs, aren't growing quickly enough to offset the declines.

Chapek said Disney is doing what it can to entice consumers to buy its movies, by offering new forms of packaging that offer greater perceived value, such as the "Beauty and the Beast Diamond Edition," which included Blu-ray and DVD discs.

Disney is also willing to experiment with "release windows," as it did in issuing Tim Burton's movie "Alice in Wonderland" on DVD three months after its theatrical premiere (instead of the usual four-month wait). 

Chapek said Disney would also seek higher margins from the rental business, increasing the wholesale price it charges for the DVDs sold to discount movie rental services Redbox and Netflix. He noted Disney will drop the wholesale price to $10 for each DVD six weeks after its goes on sale retail. 

The timing is slightly different from what we initially reported, which indicated Disney would make the movies available to Netflix and Redbox beginning 28 days after their initial DVD release. But Chapek's announcement confirms the main significance of Disney's shift in strategy with Netflix and Redbox: By charging the retailers more at the wholesale level, the movie studio hopes to mitigate the effect low-cost rentals will have on higher-margin DVD sales.

-- Dawn C. Chmielewski