Ancillary revenue from DVDs plays a significant part in modeling many television program budgets. DVDs had become a nice back-end profit driver for television in recent years. But that is
quickly changing, as consumer spending cutbacks are hurting DVD sales. The softness in the DVD space is now affecting profit projections.
Adams Media Research projects that consumer spending on DVDs and Blu-ray discs, will fall from $14.5 billion to $13.4 billion in 2009. Merrill Lynch projects that sales will be down 5% overall in 2009. Viacom's chief executive Philippe Dauman says his concern is to what extent the recession changes consumers' DVD habits long-term.
Time Warner CEO Jeff Bewkes says that he hopes that as traditional DVD revenue declines, other new sources of revenue will continue to pick up. "The new businesses, whether it's Blu-ray or electronic VOD for rental or sell-through, are picking up quite nicely," he says.