The plummeting cost of DVD threatens to cost distributorsand retailers billions in lost revenue over the next five years, delegates toScreen International's 2005 Home Cinema Summit were told yesterday.
And independent distributors blamed the studios for backinga price-cut policy that was damaging to everyone in the business, including theHollywood majors themselves.
If the price cuts on DVDs continue at the current rate, morethan $8bn could be taken out of the possible revenue for the film industry in theUK, France and Germany alone, calculates Helen Davis Jayalath, senior analyst at researcher Screen Digest.
The average consumer priceof a DVD in Western Europe fell 39% between 1998 and 1994 and there are fewsigns of slowing. Consumers have got the message that waiting just a few weekswould bring bargain retail prices, she told the conference.
If the same trend continues, the gap between revenue generated by newcustomers and that lost by lower prices will widen - an estimated $4.2bnin the UK, $2.5bn in France and $2.4bn in Germany.
The downward pressure does not seem to be coming fromconsumers: "Most people say they think DVDs are good value for money," saysJayalath.
Despite the lack of demand pressure, independent distributorssay the majors have pressed on to the detriment of all.
"Falling prices are badly affecting the industry ingeneral," Sam Dunn, general manager ofTartan Films told delegates.
"People now know if you wait you can get studio titles at£7.99 and £5.99, which is a problem where are films are £19.99.
"The major studios are undermining quality and actuallyundercutting themselves because they are not getting the profits they could."
Zygi Kamasa,chief executive of Redbus Pictures says he believes studios are more focussedon "milking all they can from DVD today because they are not sure about thefuture. That's damaging."
He said the industry was divided on the best way to priceproduct.
"They need to all get together to discuss prices but it'sjust not going to happen."
The Home Cinema Summit was sponsored by Lovefilm.com.Macrovision and DTS.