It's official: The heyday of the DVD is over. Walt Disney (DIS) CEO Robert A. Iger recently implied as much in an analysts' call—the only studio boss to suggest publicly that Hollywood can no longer count on a cash cow that has yielded billions in profits.
DVD sales slid 6.3% last year. While the economy is likely a factor, it's also clear that audiences are bypassing DVDs because they have a range of other options, from watching movies and TV shows online to playing video games. As such, Hollywood executives face a conundrum familiar to many CEOs: They have to prop up a product that is losing momentum, buying time while they rethink their entire business model...
Selling or renting movies electronically is a good business. Studios collect about 70% of the $4.99 that cable companies charge viewers to rent a movie vs. 30% for selling a DVD. Of course, DVDs still generate 70% of film profits. The trick will be to ramp up electronic distribution without tanking the DVD business.
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