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The AOL deal wiped many millions from the company's balance sheet, but DVD sales ensured that it still turned a profit.
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In Warner Bros case, DVD profits helped to stabilise the company as the consequences of its disastrous merger with AOL played out. All of this meant that the Hollywood studios experienced an unprecedented period of financial growth during the early 2000s, funded almost entirely by DVD sales. What's more, a DVD was much easier to make and distribute than a complicated mechanical cassette, so the profit mark-up was significantly higher. For some reason, consumers were far more likely to buy DVDs than they had been with video cassettes.
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During the 1990s, all of the major Hollywood distributors saw profits from DVD sales rise stratospherically. The answer lies in the changing fortunes of the DVD market. Why would a company whose profits have been so dependent on Potter for so long withdraw their most popular product from sale, at the time of its greatest demand? On the surface, this seems like a ridiculous move. It will probably take some time for stock to run out, but it will, and Potter will soon vanish from shop shelves and online retailers. The DVDs and Blu-rays will be withdrawn from sale. On the 29 December, they will stop shipping all titles. But Warner Bros have also made a fairly surprising announcement about the future of the Potter films. The film was a colossal hit in cinemas, and it's out in numerous different forms (DVD, Blu-ray, 3D, box set) just in time for Christmas. The DVD and Blu-ray of the final Harry Potter film, Harry Potter and the Deathly Hallows (part 2), is due for release next month, and will probably be the highest selling title of the year.