Are Theaters the Real Winners in the VoD/DVD War?

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The unlikely winner in the battle between DVDs and Video On Demand? According to movie mogul Harvey Weinstein, the answer is movie theaters – and it’s all because they remain the most reliable source of income for movie studios.

Talking at this weekend’s “Produced By Conference,” an annual conference put on by the Producer’s Guild of America, Weinstein said that the landscape of the movie industry is in flux because the slow increase of VoD services has eroded the demand for video or DVD sales: “It’s like working without a net right now, until VoD and the Internet situation matures,” he explained.

The problem isn’t that Weinstein doesn’t believe in VoD – just the opposite, in fact. He praised Netflix specifically for actually being interested in movies as opposed to seeing them as another product to be sold online, and said that he believed VoD online will become increasingly important to the movie industry.

But he said that the revenue raised by online services isn’t close to making up for the money lost by the slowing DVD/video market yet… Meaning that theatrical runs have become much more important for studios looking to maximize their profits. As Weinstein put it, “It’s become much more of a theatrical business because the movie has to work in theaters.”

Analysts believe that DVD revenue fell 44% last year compared with the year before, with the 2010 box office essentially flat during the same period (This year, it seems to be improving… while DVD sales continue to drop).