The dismal numbers reflect a maturing home entertainment market in Britain and mirror the United States, where revenues fell last year for the first time in more than quarter of a century.

Lavinia Carey, directorgeneral of the British Video Association (BVA), said: “We’ve had a tough market because there was not a strong box office in the first half of the year, and because DVDs are maturing.”

The number of videos and DVDs shipped last year totalled 222 million, down from 233 million the year before. VHS sales plunged 72 per cent to 10.4 million, offsetting a 7.5 per cent increase in DVDs to 211 million.

Ms Carey said piracy was also increasing and blamed the growing involvement of organised crime in distributing counterfeit DVDs. The proportion of illegal copies sold, which had been as low as 7 per cent or 8 per cent in the mid-1990s is now up at about 30 per cent.

The BVA is hopeful that the decline will be temporary. “We had an exciting slate in the last few month’s box office and the emergence of new formats, such as the Sony PlayStation Portable, are both hopeful signs,” Ms Carey said.

Sony’s PSP plays films on small-size UMD format discs. The BVA said that about 500,000 UMDs had been bought last year.

DreamWorks Animation, delivered two profits warnings last year after disappointing sales of Shrek 2 on DVD, while rival Pixar said that The Incredibles — the year’s top seller — failed to meet expectations.

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