Falling DVD sales in the US have sparked fears that optical formats are losing their grip on the movie industry. And while Blu-ray may now have slain HD DVD, the format could be in trouble before it’s even had a chance to make an impact.

Sales of DVDs fell by 3.2 per cent to $15.9 billion in the US in 2007, which Adams Media Research says is the first annual drop since DVDs first went on sale. Similar drops are forecasted for this year and next year too.

The Herald Tribune says that rather than pushing the benefits of Blu-ray to the consumer, Hollywood studios are instead desperately trying to breathe life back into the industry as a whole.

DVD sales fall in US

It’s not hard to see why DVD sales have fallen. The internet has played a massive role in the movie industry over the last few years. And while the web does provide vital revenue streams for studios, it also drains money away from them. The internet giveth, and it taketh away.

The elephant in the room, in this case, is internet piracy. In the past, the only people who bought pirated movies were those who visited car boot sales and dodgy markets. But now millions of ordinary people all over the world are downloading high-quality versions of movies, illegally and for free.

So is the general consumer losing interest in physical formats and turning their attention to digital downloads? And if so, what future can a barely-established HD optical format have in an industry in transition?

Services like iTunes and the Xbox Live Video Marketplace are offering movies to download for a fee, in an effort to tap into this consumer desire for digital copies. And 20th Century Fox is now offering a digital copy of all its titles on an extra disc inside the DVD case.

New approach

Other studios such as Disney, Sony Pictures, Warner Bros and Universal are also reportedly set to implement this idea in their own DVD releases. Some analysts believe this idea will help to rejuvenate the slump in DVD sales in the US.

We spoke to some young people who have large DVD collections but also a habit of downloading movies and TV shows from the web. They indicated that putting digital copies of movies in with DVD releases would be a positive thing.

“It’s hard to turn up the chance to download a movie that I would not usually consider buying,” said one man. “And there’s also a lot to be said for having a digital copy on my computer. I like being able to watch something with a few clicks of my mouse. It also means I can queue up a number of things to watch in a row, instead of having to change discs all the time.

“I’d definitely consider buying more DVDs if we got decent digital copies with them, yeah I think it’s a good idea.”

Tom Adams at Adams Media Research thinks that including digital files on a separate disc is a great way to get people interested in DVDs again.

“It has real potential to steal the thunder from the internet delivery companies,” he said.

Of course, the fall in DVD sales could also be a good thing for Blu-ray. High-definition copies of movies could be just the thing to reignite the public's interest in buying movies again. And it’s important to point out that in most international territories, DVD sales are not falling.

But internet piracy is a massive issue, and content providers are going to have to come up with something special if they're to persuade normal people to pay for something they could otherwise get for free.