Predictions of an 11% drop in units shipped for 2009 has the major studios re-thinking their movie strategies, since a large portion of the income stream from a movie has come from DVD sales in recent years.
But what's being overlooked is the fact that most of the income has come on the back of the studios catalogs (older movies that are just being released on DVD). As with the music business, catalog sales are basically an inexpensive source of rather large cashflow, since there are no production costs and usually only small marketing costs (compared to a blockbuster movie) involved. But as with the music business, once you've released every title in your catalog on DVD, you're stuck with only the movies that you're currently making, and that might not be enough to make the consumer part with his hard earned $$, especially in this economy.
Some in the film industry think that Blu-Ray is the DVD's replacement, but they're in for a surprise. Why should Joe Sixpack part with his dough for an expensive player and discs when his current DVD is working just fine? The picture is "good enough", which is just what the record labels heard when they tried to introduce the SACD and DVD-A on the basis of superior quality.
The music industry failed miserably when their catalogs ran dry, their replacement technology failed, and new technologies began nipping at their heels. What will the film industry do?