DVD purchasing: On the wane?

The San Francisco Chronicle had a good piece yesterday on what's behind the slow DVD sales that have been hurting the stock prices of Pixar and DreamWorks Animation.

Dan Fost writes, "By 1999, the average owner of a DVD player was buying 20 DVDs each year, according to Dan Ernst, an analyst with Soleil Securities. These people tended to be early adopters who eat up new gadgets, and then want the content to play with."

Later, the story quotes Ernst:

"`What we're experiencing now is the later adopters are either lower income or certainly more frugal on their discretionary spending,' Ernst said. `They're buying fewer DVDs per home.'

The number has dropped to about 14 DVDs sold per household per year.

Wagner, at Home Media Retailing, said there are any number of possible explanations floating around Hollywood. It could be that more people are renting DVDs through companies like Netflix and Blockbuster now that rental prices have dropped and the excitement of owning movies has given way to the realization that they are sitting unwatched on a shelf.

It could be that people are buying used DVDs, which hold up over time much better than VHS tapes..."

I spoke with someone - let's just call him a well-known director - on Friday who said that the wrangling over the two high-definition DVD formats would delay things long enough that neither would gain widespread adoption. He predicted that the next format will be pure data: either Internet downloads or video-on-demand.