Painful DVD to Blu-ray Transition Can't Top Game Biz Cycles

Format transitions are tough. That's a concept with which video gamers are intimately familiar, so when gamers and game executives hear news about the movie business that suggests even though sales of Blu-ray discs will triple in 2008, DVD sales will drop about 5%, they'll say "We've seen worse!"

Pali Research analyst Rich Greenfield said in a report Tuesday that Blu-ray sales won't be able to stem the tide of lost DVD sales, which already declined 2% last year. Looks like the industry could've saved itself a few bucks by settling on Blu-ray discs just a little bit earlier.

But compared to the video game business, where consoles are upgraded nearly every seven years or so, a 5% drop in media sales is no big deal.

At one point in 2006, when Sony, Microsoft and Nintendo were at various stages of putting out their new game boxes and gamers were hemming and hawing over their purchases, analysts predicted that the video game software business would shrink about 20% before re-stabilizing.

Pali's Greenfield says Blu-ray will eventually staunch the movie industry's sales decline by some point in 2009 or 2010. But by that time, some sales may have shifted from hard copies of DVDs to home downloads. Digital distribution "cannot be positive long-term for the physical formats such as DVD," he says. -Rachel Rosmarin