How bad will holiday DVD sales be? Studios playing it safe with VOD

Last year, holiday disc sales fell short, as the careening economy took its toll on gift giving. DVD sales are still down, although it’s unclear how bad the situation is.

All this sets the stage for the most important time of the year for homevideo: The big summer hits are about to roll out on disc. “Transformers 2″ comes out Oct. 20, for example, followed by “Ice Age 3″ the next week, “Up” Nov. 10, “Star Trek” Nov. 17 and so on. Will they all sell? Or will consumers opt to rent instead? Rental’s making a big resurgence, thanks to the recession and cheap Redbox kiosks.

Wal-Mart apparently has some doubt: The chain reportedly cut back on shelf space for DVD. And, as the WSJ notes, the chain accounts for a third of DVD retail sales in the U.S.

To hedge their bets, more studios have decided to follow Warners lead and release pics simultaneously on  DVD and VOD. Sony and Universal collapsed the VOD windows for “Angels & Demons,” “The Ugly Truth,” “The Taking of Pelham 1 2 3,” “Julie & Julia” and “Bruno.” Warners will do it on “Orphan,” “Four Christmases” and “Terminator: Salvation.”

If people are going to rent rather than buy, studios vastly prefer they view movies on VOD. It’s simple economics: Studios get a bigger cut of each VOD transaction than they do with disc rentals. The shorter the VOD window, the more enticing a rental prospect that delivery platform becomes.

For more, see my Variety story from yesterday.