Why Disney Is Cutting Back On DVDs After ‘Guardians Of The Galaxy’

Disney announced they will no longer be selling DVDs and Blu-ray discs in Australia and New Zealand, according to 7NEWS EWS in Australia. The last new Disney DVD, Blu-ray and UHD Blu-ray discs in both nations was Guardians of the Galaxy Volume 3, released on August 1. While consumers will be able to buy discs currently in stock, no new shipments from Disney’s vast content library, including Star Wars, Marvel Studios and its animated classics will be forthcoming.

Already, Disney no longer sells DVDs and Blu-ray discs across Latin America as well as selected Asian markets. While DVD and Blu-ray discs are still available in the U.S., whether Disney will phase out physical media worldwide remains to be seen. Disney cites declining sales as the reason.

The Digital Entertainment Group reports, in 2022, DVD and Blu-ray sales in the U.S. were an estimated $1.58 billion, a decline of nearly 20% from $1.97 billion in 2021. In addition, disc rentals had declined from $602.7 million in 2021 to $502.4 million last year. The one bright spot was the increase in sales of 4K Blu-ray discs, it wasn’t enough to stem the tide.

Conversely, DEG reported consumer spending for subscription streaming providers grew 17.3% in 2022 reaching an estimated $30.3 billion. DEG noted that streaming accounted for nearly 83% of all home entertainment dollars in 2022 with DVD’s accounting for less than 10%.

By comparison, in 2005, DVD sales peaked totaling $16.3 billion in sales with disc rentals adding another $6.5 billion. In December 2006, Nielsen reported that U.S. homes with a DVD player (81.2%) had surpassed homes with a VCR VCR (79.2%). Nowadays, just over one-half of all U.S. homes have a DVD or Blu-ray player (and VCRs are not being manufactured.)

The sales of physical discs have been declining in recent years as streaming services like Disney’s Hulu and Disney+ gain in popularity. Large Hollywood studios such as Disney prefer consumers to subscribe to streaming services which provides a more reliable revenue source than the fluctuating sales of discs. While owning a DVD library allows viewers to watch content on-demand at any time, Disney (along with other studios,) have, at times, dropped content from their streaming services.

In its most recent earnings report, Disney+ had 157.8 million global subscribers with 46.3 million in the U.S. and Canada. The subscriber counts failed to meet Wall Street’s financial projections. Disney CEO Bob Iger has told investors he expects streaming to become profitable by next year.

Netflix NFLX , which began as a video rental company 25 years ago with its trademark red envelopes, announced in April, it was shutting down that service effective September 29. In 2005, Netflix had been renting an average of one million DVD’s daily. In 2021, non-streaming (mostly DVD sales) accounted for just 0.6% of Netflix total revenue. In 2007, Netflix launched its streaming service. By second quarter 2023, Netflix had 238.39 million global subscribers including 75.57 million in the U.S. and Canada.

With the ongoing WGA and SAG-AFTRA strikes, there is some irony to the timing of Disney’s announcement. One of the primary issues of the WGA strike of 2007-08 was the royalty payments of DVD sales from TV programs. This time, it is revenue from streaming that is one of the strike issues.