According to an article in USA Today, sales of DVDs in 2007 were down 3% over 2006. “Economic hurdles” are cited as the only culprit, but I’d hazard a guess that buyer hesitation due to the HD format war, DVR/Tivo, On/InDemand channels, and the fact that DVDs as a technology have peaked all probably played a part in the sales downturn.

The jury seems to be out on whether HD discs or downloading HD is the true next step, but I’m starting to think it’s going to be a balancing act between the two. Sure, it’s looking like in the! future! you’ll be able to download 2001 or a season of The Sopranos or whatever in HD, along with hundreds of thousands of other movies — but if you want to keep them, where the hell are you going to store them?

Anyway, it’s ok DVD. You had a great run.

Overall, about 90 million homes have a DVD player, 2 million more than in 2006. “But some lower-income homes rent DVDs because they don’t have the income to build a big library,” says Wade Holden, an entertainment industry analyst at research firm SNL Kagan. “Where the growth is really coming is subscriptions like Netflix and Blockbuster Online.”

He estimates that in 2008, such subscriptions will increase from $1.7 billion to $2.1 billion.

Another area of growth: the movie download market, which is expected to double from $689 million in 2006 to $1.6 billion in 2008, SNL Kagan estimates.

As for high-definition discs, so far they amount to about 1% of the home-video market (about $300 million). But many industry watchers expect that Warner Home Video’s decision to go exclusively with Blu-ray discs could end the nearly two-year-long format war with rival HD DVD — and spur consumer spending.

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