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Hollywood To Music Biz: Thanks For Tanking - You're Boosting DVD Sales

tvgraphic.jpegThe funeral for the DVD is going to have to be put off for a bit longer. Sales slumped last year, for the first time ever, and the decline was supposed to accelerate in 2008. But Netflix (NFLX) just turned in a nice quarter and says it can't see any slowdown ahead. And Pali Research's Rich Greenfield, who's been (loudly) bearish on the business for a while, now says he's wrong: Earlier this month he upgraded his FY estimate from a drop to "flat". Now he thinks that number is too conservative (reg required).

What's happened? Part of it, Rich thinks, is due to the slumping economy: DVDs are a pretty affordable entertainment option during belt-tightening times. And Blu-ray sales, while small, are growing, now that the ridiculous format war is over. But there's something else going on, too, Rich thinks: The dying CD business is helping out Hollywood.

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The home entertainment division leaders of several major studios believe that expanding Blu ray DVD floor space is not coming at the expense of standard definition DVDs, implying that total DVD floor space has actually increased y-o-y (reductions in CD floor space are helping the movie industry).

The chattering classes who gab on about media don't often talk about floor space, and how much of it retailers are allocating to different products. But it's crucial: If you can't see a DVD at Wal-Mart or Target, you can't buy it.

The big boxes have been cutting back on CD floor space for years, which has been accelerating that format's death sprial. And last fall the expectation was that it was going to happen to DVDs, too. But it looks like one dying medium is going to help prop up another aging one, at least for a bit.

See Also: Death Of The DVD: Not Coming Soon
Blu-Ray Sales To Triple, DVD Market Still Screwed
Hollywood's DVD Problem: Not Going Away

Disclosure: Mathias Döpfner, CEO of Business Insider's parent company, Axel Springer, is a Netflix board member.

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