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If you needed more proof that the DVD business is declining, look no farther than today’s Scranton Times-Tribune story about more layoffs at Cinram’s optical disc replication plant.

The plant, located in Olyphant, Pennsylvania (near Scranton) was originally owned by Time Warner and operated as Warner Atlantic Media Operations (WAMO). Toronto-based Cinram International bought the facility from Time Warner in July of 2003. Peak employment was reached in 2005. Since then, the company has laid off 683 employees.

Today’s announcement states that an additional 310 employees will be let go by December, bringing employment to about one-fourth of what it was seven years ago. Cinram also announced it would cut loose 482 employees from a DVD distribution facility near Nashville, Tennessee.

The company lost a contract to replicate Warner Home Video DVDs this past July. Instead, Technicolor will replicate Warner DVDs at a facility near Guadalajara, Mexico.

Ironically, Cinram’s income from home video sales increased in the first quarter of 2010 by 6.6 percent to $240.6 million, but compact disc revenue dropped 14.5 percent to $31.7 million.

It’s apparent that distributors of packaged media have to cut costs drastically to fend off the threat of direct downloads and streaming, along with video on demand. So Cinram’s announcement wasn’t entirely a surprise.

The question now is how much longer Cinram can afford to keep the Olyphant facility in operation. The Warner Home Media contract represented 28% of Cinram’s annual revenue stream, and that will be difficult to replace.

Posted by Pete Putman, August 4, 2010 3:22 PM

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About Pete Putman

Peter Putman is the president of ROAM Consulting L.L.C. His company provides training, marketing communications, and product testing/development services to manufacturers, dealers, and end-users of displays, display interfaces, and related products.

Pete edits and publishes HDTVexpert.com, a Web blog focused on digital TV, HDTV, and display technologies. He is also a columnist for Pro AV magazine, the leading trade publication for commercial AV systems integrators.