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Customers won't buy DVDs, won't buy digital video - yet

Movie studios are between a rock and a hard place. The DVD market continues to fall, while consumers have yet to jump on board with digital purchasing.

Most movies this holiday season are going to be sold in "combo packs," where buyers get a Blu-Ray disc and a digital file they register online allowing for online cloud storage of their movies, according to the Hollywood Reporter. Most movie companies are behind a system called UltraViolet, though Disney is using their own system, Keychest.

After Netflix recently changed their pricing plans, raising the cost of getting both streaming and DVDs in the mail, many users reacted with anger. Could this be an opportunity for the movie companies to get consumers more interested in purchasing films instead of renting online? Netflix says that angry customers are going to mean a cut in profits, and they also face negotiations with various companies to maintain and expand their supply of streaming movies and other content.

The Hollywood Reporter quotes Wall Street analyst Harold Vogel, who points out the strength that DVD still has over cloud-based viewing. "There's something to be said for just taking the DVD out of the little holder and slipping it immediately into your player, as compared to waiting for the cloud to show up, logging in, watching the bar on your screen or whatever."

In 2009, home entertainment spending was $22.04 billion, according to SNL Kagan, with $13.3 billion in retail sales, $7.4 billion in rentals and $1.33 billion in online video on demand. In 2011, the overall number was down $1.79 billion to $20.25 billion. That last number has more than doubled to $3.32 billion, but that difference is more than made up in what was lost in retail sales, which fell $2.7 billion to $10.6 billion.

What do all those numbers mean? It means you're not paying to watch movies at home the same way you were a few years ago. And for the movie companies, things seem likely to get worse before they get better.

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