Since 2008, DVD sales have declined by more than 86%.
A combination of the Great Recession, a rise in customers buying on-demand and digital copies of films, and the launch of streaming services have caused DVD sales to plummet.
Since 2011, platforms like Netflix, Hulu, and HBO have seen sales balloon 1,231% to 12.9 billion dollars
DVD sales have been on the decline for over a decade, but a slew of new streaming services and a shift in how consumers are watching movies and TV programs could be the final death knell for the technology.
At its peak, DVD sales reached 16.3 billion dollars and were 64% of the U.S. home video market; that was in 2005. These days, DVD sales account for less than 10% of the total market, with total sales hitting 2.2 billion dollars in 2018.
The Blu-ray discs, which have always been slightly more expensive than DVDs, launched in 2006. At most, Blu-Ray sales reached 2.37 billion dollars in 2013, before falling to 1.8 billion dollars in 2018. It is likely that Blu-Ray sales fractionally impacted the decline of DVD purchases, but the fact that DVD sales still outpace Blu-Ray sales shows it is not the real culprit.
Instead, a combination of the Great Recession, a rise in customers buying on-demand and digital copies of movies, and the launch of streaming services have caused DVD sales to decline by more than 86% in the last 13 years.
And that decline could get worse as more streaming services enter the market. Disney+, Peacock and HBO Max are all arriving within the next year. Apple TV+ rolled out on Nov. 1st, and Disney+ arrives Tuesday.
Leading up to the economic downturn, there was a huge boom in DVD sales.
Between 2001 and 2005, customers had transitioned away from VHS and were buying up not only new films as they came out but also older films that were being released on DVD.
However, once customers had bought the DVD versions of those library movies, their DVD spending started to decrease. So after hitting a high of 16.3 billion dollars in DVD sales in 2005, there was a 3% drop in 2006. However, DVD sales actually rose about half a percent in 2007.
The real inflection point was the Great Recession. From 2007 to 2008, DVD sales slumped 26%, falling to 11.6 billion from 15.7 billion dollars. Bruce Nash, the president of Nash Information Services said consumers ditched DVD spending as their disposable income shriveled, kicking off the demise of the DVD industry.
The U.S. home video market also slumped during the same period. After hitting a high of 25.2 billion dollars in 2005, by the end of 2008, total sales of DVDs, Blu-Rays, on-demand video and digital had fallen 28% to 17.9 billion dollars.
The DVD sales decline was compounded in the times after the economy had recovered because of the rise of video-on-demand — renting and buying movies through cable subscriptions — and digital downloads began to grow in popularity.
Consumers could rent movies for as low as 99 cents and buy a movie outright for around 10 dollars. For comparison, DVD prices were around $20 and Blu-Rays were closer to $25. Many had adopted digital film purchases during the economic downturn because it was a cheaper option.
“What we’ve seen is that the digital market is very different from the physical market,” Michael Smith, professor of information technology and marketing at Heinz College and Tepper School of Business, said. “And when someone moves from the physical market to the digital market, they move across all platforms.”
“The big fundamental shift here is that when you look at a film you want to watch, and maybe you missed it in theaters, 10 to 15 years ago, you can buy the DVD or rent from Blockbuster,” Nash said. “Now, I’ve got HBO and going to be on HBO in a couple of months. It’s not worth buying the DVD to watch it. I’ll just wait a bit.”
Since 2011, platforms like Netflix, Hulu, and HBO have seen sales balloon 1,231% to 12.9 billion dollars. In the meantime, DVD sales continued to slip, falling more than 67% between 2011 and 2018.