Is DVD on the downturn? During a recent lunch with one of my favorite studio digital media chiefs, we discussed the future of home entertainment - DVDs, Blu-Ray, Netflix, hulu, On Demand, digital downloads, you get the basic idea. We mused what the return would be in the next year or two when more of the consumer world is looking for at-home (”digital home”) entertainment, and not tuned into buying packaged DVDs or renting from brick-and-mortars like Blockbuster. Do people actually still buy and rent this way still, you ask? Yes, but they’re moving towards the $4 on-demand, 24-hour window rental - which is 1/4 what studios are used to based on the current retail environment. So how do they survive?

The NYTimes recently posted a great article, “Who Threw the DVD From the Train?”, which editorializes the change of pace at studios. Separating the huge film libraries that bring in hundreds of millions per year in revenue, individual dvd releases no longer have the “we built this studio on DVDs” mentality that most studio heads used to tout.

At least for the moment, Hollywood is heading back to the days when the theatrical run of a film was actually important for more reasons than serving as a marketing platform for home video.

On a recent outing to see “Taken” with Liam Neeson, I was struck by the experience feeling like instant gratification experience of the big-screen, as opposed to waiting for the longtail Netflix (”Long, long wait,” anyone?) or buying the disc as a loss-leader at Fry’s Electronics or BestBuy, or best-case scenario in the $5.99 dump bin at the grocery store, which all seem to be pushing standard-def dvds at liquidation prices.

This was different, this felt like a ‘one-day ski trip’ as opposed to saving for the ‘mountain getaway home.’ Hedonistic, but most of my viewing is on a 40″ flat screen.

Studios, of course, aren’t giving up on DVDs; home video is still a huge business. But the movie capital is starting to acknowledge that it has no idea what the immediate future will look like — maybe DVD sales will perk up in a few months, or maybe high-definition Blu-ray discs will finally pop, or maybe the whole thing is kaput as video-on-demand services take root. So producers are being leaned on to come up with a different type of movie.

Now that train is reversing. Business at the multiplex is going gangbusters. Ticket sales are up 14 percent this year over the same period in 2008, according to the tracking firm Media by Numbers. Attendance is up 12 percent after falling the last two years.

The Times also pushes that group sales are again gaining steam in Hollywood - innovative musicals or remakes of well-know films, and even branded films like “Monopoly” or “Candy Land.” Kevin James in “Paul Blart: Mall Cop” is another interesting success story - a “pack-’em-in middle” comedy that, like “Taken,” has accelerated past $100M in domestic box office, and hits their respective genres well.

Back to the falling price of DVDs, if the studios continue a return to theatrical highs, and the consumer, at-home audience gets more ‘longtail’ savvy - i.e., they realize they can start to queue up the huge amount of films hitting ’some window somewhere,’ (…. and Blu-Ray continues to seem ‘extravagant’ spending given the economy), then packaged DVD prices will start to drop more and the digital pricing may creep up by notches - not by advertising means however - to meet in the middle for ‘new’ or ‘popular’ releases.

We’ll continue to look at what this means to the world of M&E (Media and Entertainment) - how can one create a better at-home experience without losing too much of the dollar to digital. Media survival trending, one could call it.

Today at the OMMA marketing conference in Los Angeles, many individual speakers commented on how NBC Universal’s Jeff Zucker had inflated his “Trading analog dollars to digital pennies” infamous quote to “digital dimes“: “Analog dollars to digital dimes.”

Take Zucker’s updated metaphor with a different context, then, and figure out how traditional DVD dollars start to become worth less (”half-dollars”?) and see how this deflation works both ways when it comes to future digital-analog discussions. My two digital dimes’ sense…