U.S. DVD sales drop and rentals flat

LAS VEGAS (Reuters) - U.S. home entertainment sales fell 5.5 percent to $22.4 billion in 2008 as higher sales of Blu-ray discs helped offset a 9 percent drop in DVD sales and flat rentals, a digital trade group said on Wednesday.

Sales in the mature U.S. DVD market fell 9 percent to $14.5 billion and rentals were flat at $7.5 billion, said Los Angeles-based Digital Entertainment Group in a report released at the Consumer Electronics Show in Las Vegas.

DEG said the one bright spot in home entertainment was the Blu-ray disc format, which grew fourfold to nearly $750 million. The group noted that nearly 10 million Blu-ray playback devices have sold since the format launched, with three million devices selling in the fourth quarter alone.

Home entertainment sales began stalling in 2004, when they hit $24.9 billion. In 2005, sales fell to $24.4 billion, edging up slightly to $24.5 billion in 2006 and then falling to $23.7 billion in 2007.

The DEG's members include dozens of consumer electronics, digital and entertainment companies including Blockbuster Inc, Hewlett-Packard Co and major Hollywood studios.

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(Reporting by Sue Zeidler; Editing by David Gregorio)