U.S. home video revenue fell 4 percent to $12.6 billion for the first nine months of 2010 as DVD sales plunged 16.5 percent, a gap that soaring sales of Blu-ray discs and downloads didn't fill.
The figures were released Thursday by a consortium of movie studios and electronics makers called the Digital Entertainment Group.
DVD sales fell to $5.5 billion, and rental revenue fell 4.4 percent to $4.4 billion.
Spending on digital downloads and video-on-demand rose 23 percent to $1.7 billion, while purchases of Blu-ray discs rose 80 percent to $1 billion.
Total spending was $13.1 billion in the period last year.
Even with rising digital and Blu-ray sales, Ron Sanders, the president of Time Warner Inc.'s Warner Home Video unit, said, "We continue to encounter tough market conditions."