• VentureBeat, Tuesday, March 3, 2009 11:15 AM

Hollywood can no longer count on DVD sales to be the cash cow it's been in the past, says VentureBeat's MG Siegler. He points out that DVD and Blu-Ray sales "fell off a cliff" in the fourth quarter, which is traditionally the strongest of the year for sales. Meanwhile, movie rentals have remained firm, suggesting perhaps that people are waiting until the shift from DVD to Blu-Ray occurs in a more "meaningful way."

That may be one reason, and the recession may be another, but Siegler thinks consumers have stopped buying DVDs thanks to a "larger, and undoubtedly more troubling trend for Hollywood": online movie rentals. Indeed, why mount a trip to your local Blockbuster when you can now rent movies instantaneously via Netflix or iTunes, and without leaving your home? Worse, still, for Hollywood: what's the point of actually buying a movie when instant access is just a few clicks away? After all, as Siegler points out, it's still cheaper to rent a movie three times than it is to buy one.

The main problem for Hollywood is that it makes a lot of money off movie sales, but not a lot off rentals. Given the ease with which users can rent movies online, the studios may find themselves hard-pressed to convince them to buy. DVD extras won't be enough, but providing unfettered access to your movie collection in the cloud might be, says Siegler. If so, movie studios will need to get to work on sorting out the digital rights management.

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