The importance of DVDs to the entertainment industry will decline significantly over the next few years, predicts a study from research firm In-Stat.
Physical disc sales, which includes both DVDs and Blu-ray discs, are expected to decline by $4.6 billion between 2009 and 2014, In-Stat said today. Over that period, DVD sales are expected to plummet. At the same time, Blu-ray sales are expected to climb--but not enough to make up for the decline in DVDs.
In place of physical discs, streaming content and digital downloads are quickly gaining steam. In-Stat said that the video-download and streaming revenue is expected to grow from the $2.3 billion it generates now to $6.3 billion "within five years."
"Video disc rentals will continue their significant decline," In-Stat principal analyst Keith Nissen said in a statement. "The convenience and utility of the online offerings are simply too compelling."
In-Stat also examined the impact streaming could have on the television business. According to the research firm, download revenue of U.S. television programming is expected to "more than triple" between 2010 and 2014. Moreover, the company said that video-on-demand subscription revenue could hit $3.5 billion by 2014.
The streaming space is quickly becoming a key battleground for several prominent companies. During his announcement of the Apple TV device earlier this year, Apple CEO Steve Jobs said his company found that consumers are more interested in streaming content than storing it on the set-top box. Apple currently allows people to rent television shows and movies from the Apple TV, as well as stream music and video from their computers. The device has no internal storage.
Netflix, arguably the most notable player in the streaming market, is a vastly different company than it once was due to the changing entertainment landscape. On the company's third-quarter earnings call, Netflix CEO Reed Hastings said his company is "now primarily a streaming company that also offers DVD-by-mail."
Of course, Apple and Netflix are by no means alone in the digital-content market. Their competitors include Hulu, Amazon.com, and Vudu.