However, there don't appear to be any quick fixes. Instead, the studios are banking on a combination of new technologies to gradually supplant the old DVD gravy train. First stop: A crisper picture for that summer popcorn movie on the widescreen TV.
At the start of the year, Warner Bros. threw its support behind Blu-ray discs, one of two technologies vying to set the standard for high-definition video in the home. Studio executives say the decision to unite behind a single standard -- together with the availability this month of less expensive Blu-ray players -- should help to reverse declining DVD sales this year and return them to growth by 2009.
"We have seen increases because the consumer has no more confusion, has no more hesitation to jump into the market," said Bob Chapek, president of Disney Studios Home Entertainment. "Once bigger retail sections devoted to Blu-ray, complete with signage and prominent fixtures, start to appear [this month], it's going to be a huge catalyst."
So far, however, Blu-ray has been slow to catch on.
"We have a hard time understanding why consumers will rush out to Best Buy to pick up the Blu-ray version of 'Caddyshack' or 'Sleepless in Seattle,' " wrote Bernstein Research analyst Michael Nathanson in a recent report. He said that early adopters were buying fewer high-definition movies than they did in the first years after the introduction of the standard-definition DVD.
At the same time, Hollywood is accelerating efforts to sell and rent movies online, with a spate of deals coming together in the last month. For example, all the studios except Disney had refused to sell their new films through Apple Inc.'s online iTunes store, for fear of creating a behemoth like Wal-Mart, which they feared could dictate the market. (Disney, whose single largest shareholder is Apple Chief Executive Steve Jobs, was the first studio to offer downloadable movies and television shows through iTunes.) But Disney's rivals relented in May, after Apple agreed to pay more for those titles. Now iTunes sells the latest movies on the same day that they are released on DVD, although most of the studios still refuse to offer them immediately as rentals.
Meanwhile, Disney agreed last month to offer its feature films to TiVo subscribers who have high-speed Internet connections, allowing them to select and watch movies on their TVs. This is the second big movie deal for TiVo Inc., which offers the films of other studios through Amazon.com Inc.'s Unbox online service.
