After a disappointing first half for DVD and Blu-ray (BD) disc retail sales, Hollywood studios are pin­ning their second-half hopes on upcoming blockbuster release titles, according to an IHS Screen Digest report.

DVD sales for the first six months of the year amounted to 249.0 million units, down 15 percent from 292.9 million during the same time in 2010. Spending fell by a larger 19 percent, slipping to $3.10 billion, down from $3.82 billion.

Meanwhile, sales of BD units for the period reached 38.4 million units, up 19 percent from 32.2 million units the same time a year ago. Spending amounted to $857 million, up 11 percent from $774 million.

While BD growth was positive—especially diffi cult to achieve at a time that U.S. consumers are de-leveraging and keeping a tight lid on spending—the overall BD numbers were less than what the industry had hoped for. As a result, full-year sales of BD discs likely will amount to approximately 106 million units, a sharp reduction from the studios’ more optimistic expectations coming into 2011 for BD units to sell in the 127 million-unit range. And even with full-year sales already lowered, the target can be reached only if the second half delivers completely on the hoped-for results.

All told, total retail sales during the first half of DVD and BD combined dropped to 287.4 million units, down 12 percent from the 325.1 million units in the first six months of 2010. Overall spending retreated to $3.96 billion, down 14 percent from $4.59 billion.

Stronger BD Slate Expected in Second Half
For the BD market in particular, initial projections had assumed that the economy would pick up steam and that consumers would gain enough confi­dence to part more willingly with dis­cretionary income. Midway through the year, however, the BD market failed to show livelier results, thwarted by an ex­tremely weak theatrical slate coming to video, together with a sputtering eco­nomic recovery that dampened consumer buying behavior in many sectors.

Nonetheless, movie studios are hopeful that the second half will prove different.

Already, it appears that the total box-office take behind the movies coming to video in the second half will compare favorably to that from last year’s second-half slate, especially given the fairly dismal 16 percent contraction seen during the fi rst half. This is the key reason for bolstered expectations of better BD and DVD performance by the end of 2011, IHS Screen Digest believes.

Among the list of strong retail-focused titles scheduled for release in the second half are “Harry Pot­ter and the Deathly Hallows: Part 2,” which earned $370.6 million in the U.S. box offi ce; “Transformers: Dark of the Moon” ($349.5 million); “The Hangover Part II” ($254.3 million); “Pirates of the Caribbean: On Stranger Tides” ($240.3 million); and “Fast Five” ($209.8 million).

A further good omen for a better second-half BD performance is a promising lineup of catalog titles that are new to the high-definition format—all of which sold more than a million units in their original DVD home video releases. The new titles out on BD for the first time include “The Big Lebowski,” which made only $17.5 million in its box-office run but has gone on to become a cult classic, selling nearly 2 million DVDs since its original theatrical release. Others include the new 3-D conversion of “The Lion King,” with more than 30 million units sold previously on tape and disc in the United States; and “Star Wars,” in boxed sets featuring the original trilogy, the prequel trilogy, as well as all six movies collected together in a single package.

Challenges to BD Still to be Found, However
Among the challenges faced by the BD market, one of the biggest impediments for a clean transition from DVD—a format in decline—is the backward compatibility of the DVD format on BD players. Al­though BD hardware adoption has been strong, consumers have been happy for the most part to continue buying less expensive DVDs that also can be viewed on BD players, going only for the more expensive BD titles that they feel compelled to own in a high-definition format. 

Another speed bump to a more robust BD market stems from the slow switchover at retail of DVD to BD stocking. Retailers have only limited space to devote to physical video product, but even added BD shelving has contributed little to boosting overall sales because consumers are not buying BD titles in the quantities hoped for by the industry.

To be sure, the convergence this year and next of several factors—including the strong second-half slate for new releases and catalog titles alike—may help BD to start reaching its sales potential. 

Retailers like Walmart also are promoting BD titles with renewed vigor, including attaching a $10 store coupon to BD titles for the retail giant’s Vudu online service, along with a digital copy compatible with the Vudu viewing hardware. 

Learn More > Studios Look to Second Half for Im­proved BD Sales