This article from the L.A. Times covers many of the reasons for the decline in the growth rate of DVD sales.
Something that the article misses, but that I think is an important phenomena is that DVDs aren't High Def, and all those people with their fancy new systems know that HD-DVD and BluRay DVD are just around the corner.
The titles with the biggest decline are the cinephile DVDs with the higher price tags. Why buy a Standard Def product this year when you know a super-duper ultra special deluxe HD edition will be released in 6-9 months. (like Kill Bill for instance, the current available version lacks special features and surely QT has in mind a combined cut like his original intention for the theatrical run).
Both groups supporting the two competing HD formats seem committed to reasonably priced players and claim manufacturing cost for the new disks won't be greater than the current generation, so higher initial prices should drop to the $20-25 priced to sell price point by Christmas '06 (plus with two formats a pricing war will be probable, neither Sony nor Toshiba want to be Betamaxed this time around).
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