'BOOM TIME' OVER FOR DVD SALES, RENTALS SLOWING AS DIGITAL DISC TURNS 8.

Byline: Greg Hernandez Staff Writer

CENTURY CITY - In past years, the annual Home Entertainment Summit has been a backslapping affair filled with reports of gaudy DVD sales records and record revenues. But as the DVD turns 8, this year's gathering at the Century Plaza Hotel on Tuesday had more sobering news, with sales and rentals of the discs slowing to single-digit growth for the first time.

``The boom time is over, the S-curve is here,'' said Steve Nickerson, Warner Home Video's senior vice president of market management.

According to the Digital Entertainment Group, sales of DVD software grew by 9.8 percent for the 12 months ending March 2005, with revenue up by $2.2 billion.

``There's a lot of wringing of hands that the market isn't growing by, like, 60 percent,'' said Peter Staddon, executive vice president of marketing for 20th Century Fox Home Entertainment. ``Lots of markets would dream of that kind of growth. It's a matter of putting it in perspective.''

Staddon, who presented a U.S. market update at the conference, said in an interview that the industry needs to find ways to return to double-digit growth in order to remain robust in an age when nearly 85 percent of U.S. households will have at least one DVD player.

``Now we're at the time we've got to rely not on hardware to hand us growth on a silver platter,'' Staddon said. ``If we continue to provide great product, there's no reason why we can't propel market growth.''

While sales of new-release feature films have climbed by 12.1 percent, according to the DEG, it is TV on DVD sales that are booming, with a growth spurt of 49.5 percent over the 12-month period. Additionally, catalog DVD titles sold nearly 31 percent more units than new-release DVDs.

``Catalog has just been phenomenal,'' said presenter Tom Adams, president of Adams Media Research. ``That has shifted the weight of the business somewhat.''

Most of the heads of the home entertainment divisions of the major studios were present for the final day of the high-profile event produced by Home Media Retailing Magazine.

But during a presidents' panel, they chose not speak publicly on the home video industry's hottest topic: high definition DVD, which has split the studios into two camps.

With rival formats, HD DVD and Blu-ray, both determined to move forward during the fourth quarter, many see a likely repeat of the disastrous VHS-Betamax wars of the 1980s.

``Y'all are crazy!'' Tower Records video executive Kevin Cassidy exclaimed when a panel discussion covered the format war.

Cassidy said competing formats would be ``extremely problematic'' and would alienate consumers, who will need clear reasons to spend the money to upgrade their home theater systems.

Said Cassidy, ``the idea that we would go back into a format war, we would have to explain it to consumers who are basically becoming their own creative directors.''

Greg Hernandez, [phone]

greg.hernandez(at)dailynews.com