DVD Sales Slump Forces Hollywood to Rethink Its Cash Cow

LOS ANGELES - For a decade, the DVD was Hollywood's golden goose, a $16 billion-a-year business that turned flops into hits and libraries into gold mines. Now the goose is sick, and the studios are scrambling for what comes next.

DVD sales fell again in the first half of the year, continuing a slide that began in 2007 and has cost studios billions. Blu-ray, the high-definition format that won this year's format war when HD DVD surrendered, is growing but too slowly to fill the gap.

The industry's hopes are split three ways: Blu-ray discs, digital downloads through services like Apple's iTunes and Amazon's Unbox, and ad-supported streaming, which made a star this year of Hulu, the NBC-News Corp. joint venture.

"The DVD didn't die. But its growth years are over, and that changes every green-light decision in town," said a studio distribution chief.

The economics explain the anxiety: a DVD sold for $20 might return $15 to the studio; a download or stream returns a fraction of that. Executives call it trading analog dollars for digital dimes — except this time the analog dollars were digital.

The shift has consequences for consumers too: studios are windowing releases more aggressively and pushing Blu-ray players, whose prices have fallen below $300, as the holiday season's must-have gadget.

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Associated Press writers contributed to this report.

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