The digital age was supposed to destroy the movie theater business. Why drive to a multiplex and stand in line to buy four $9 tickets when it's easier, and perhaps cheaper, to buy a $29 DVD and watch it at home. The DVD is the gift that keeps on giving because it can be watched endlessly if a consumer is so inclined.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% But for the first time since 2002, movie ticket sales have surpassed DVD revenue. According to data from Adams Media Research reported in The Wall Street Journal, "Americans spent $9.87 billion at the box office in 2009, 10% more than in 2008." Meanwhile, DVD sales fell 13% to $8.73 billion.
One explanation for the changing trend is that studios released several huge blockbusters this year, pushing box-off sales in North America above $10 billion by some estimates. But the drop in DVD sales is harder to analyze.
It's possible that DVD sales are being undermined by new VOD options offered by cable companies and some online movie streaming services, including Amazon (AMZN) and NetFlix (NFLX). Cable TV set-tops are now set up so that subscribers have access to hundreds of films that they can rent and watch at any hour of the day or night. The fees for these cable rentals are about the same as a movie ticket.
Consumers may also have realized that they will not watch most movies more than once. From time to time people may have a "favorite" that they will watch two or three times. But owning a DVD that will be played only once seems to have lost its charm.
The DVD business may not be in permanent decline. A few years ago many analysts wrongly predicted that theater sales would drop every year. Forecasts are, after all, only forecasts.
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Movie Ticket Sales Surpass DVD Revenue