SALES OF DVDS SLOW DOWN LACK OF BLOCKBUSTER TITLES CITED.

Byline: GREG HERNANDEZ Staff Writer

Sales of DVD titles and players were ``stable'' during the first half of 2006 as the maturing DVD industry struggles to regain some of the explosive growth it enjoyed for so many years.

According to a midyear report released Tuesday by the Digital Entertainment Group, nearly 14 million DVD players were sold from Jan. 1 through the end of June, virtually the same pace as last year.

More than 740 million DVDs were shipped to retail outlets during the first half of the year, a 4 percent drop from 2005's midyear total of 772 million units, according to figures compiled for DEG by Kaplan, Swicker & Simha.

``What we've seen in the first half of the year is a natural, expected slowing of DVD sales,'' said Steve Nickerson, senior vice president of market management for Warner Home Video. ``DVD sales are virtually flat.''

But industry leaders note that in addition to the still growing sales for TV on DVD titles, there is also growth in music DVDs and special-interest films including documentaries.

Ralph Tribbey, editor of the industry newsletter DVD Release Report, said one cause of the stalled sales of titles is the lack of blockbusters from 2005 when there was a record box office slump.

``It just hasn't been there,'' Tribbey said. ``But I think in the third and fourth quarters, things will go up and offset the early decline. We have a lot of big films and certainly with `Pirates of the Caribbean: Dead Man's Chest' opening so big, it's a real strong signal that we are going to have a very good October, November and December.''

In addition to ``Pirates,'' which just set the all-time opening weekend box office record and had grossed $153.8 million as of Monday, the summer has had such hits as ``The Da Vinci Code,'' ``X-Men: The Last Stand,'' ``Superman Returns'' and ``Cars.''

In the past nine years, 6.3 billion DVD discs have been shipped and there are now more than 60,000 DVD titles available to consumers. But the double-digit growth enjoyed for the first seven years has slowed to a halt.

Now the major studios have been banking on the arrival of next-generation DVD players and discs to spur new growth.

High-definition DVD is high-resolution video and audio technology that represents a clear quality improvement over the standard DVD. But confusing matters, and possibly consumers, are two new high definition DVD formats -- Blu-ray Disc and HD-DVD, which went to market in recent months.

While the major studios were initially split into either Blu-ray or HD- DVD camps, most have since hedged their bets and are committed to releasing movie titles in both formats this year. There is still debate over whether the two formats can co-exist or whether one must prevail in order for consumers, other than early adopters, to embrace the new technology.

``The big question remaining unanswered is whether Blu-ray or HD will succeed,'' Tribbey said. ``People are taking a wait-and-see attitude.''

Since the DVD format was launched in 1997, more than 175 million products that play DVDs, including set-top and portable players, DVD recorders, Home-Theater-in-a-Box systems, TV/DVD and DVD/VCR combination players have been sold to consumers, according to data from the Consumer Electronics Association.

He said approximately 52 percent of people who own a DVD player have more than one, which he said reflects the growing popularity of HTIB systems and other products.

``Consumers in some 85 million U.S. households continue to enjoy their DVDs beyond the living room into every room of the home, as well as into cars and a variety of portable devices for use on the go,'' said Nickerson, a member of the DEG's communications committee.

greg.hernandez(at)dailynews.com

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CAPTION(S):

chart

Chart: Midyear sales stable

SOURCE: The Digital Entertainment Group