MUMBAI: Hollywood is in turmoil with the news that DVD sales have fallen by more than ?3.5billion. The DVD market, once the industry‘s most lucrative revenue stream, appears to have peaked.

The decline spells trouble for the industry which is desperate to avoid suffering the same fate as the music business.

"Previously if films flopped you could make up the difference on DVD. That‘s harder to do now. Business is tougher and people need to be more efficient and adaptable. I think with the decline in DVD sales inevitably Hollywood is getting nervous about the films its making ... and we could see a decline in the number of films being made," said Studio Canal Head of Home Entertainment John Rodden in a report.

High street rental stores have given way to digital providers and streaming services. But though digital downloads are on the rise, it is not offsetting the drop seen in physical sales.

The market is worth ?2.6 billion to the UK economy but

demand for actual discs fell last year by 8.3 per cent.