Hollywood's new militants just haven't read the script

A fight over DVD cash seems outdated so why might actors stage a rerun of the writers' strike? asks Stephen Foley in New York

It has been a long winter of repeats and ropey reality TV shows for America's television viewers, but just as production of popular dramas cranks back into life after the writers' strike, a new threat is on the horizon. Actors' unions are going into battle for a bigger cut for their members from DVD sales, and they are refusing to rule out a walkout of their own.

DVDs? It all sounds a bit retro, particularly as the writers went to the barricades for a bigger share of revenues from digital downloads and internet streaming of their shows and films. They quickly dropped their ambition of an increase in DVD royalties to get more of what they wanted on digital media.

This is an age when popular TV shows like Lost, Ugly Betty and Desperate Housewives are available to buy for download on iTunes within hours of being broadcast. It is an age when the broadcasters themselves are experimenting with free streaming of shows on their websites. And in the past week, Hulu, an experimental TV-on-the-web service backed by Rupert Murdoch's Fox and General Electric's NBC, has begun offering old and new shows and been hailed as the future of television by some visionaries.

In an industry whose business model is being buffeted by these developments – and by the risks of online piracy that they could entail – a stand-up fight over revenues from old-fashioned DVDs looks quaint.

But this overlooks the billions of dollars still being harvested from DVDs, and actors' long-held grievances over the relatively small cut they take from sales. Hollywood is weary after the three-month writers' strike, and actors led by George Clooney (pictured) and Tom Hanks have pressed their union to hold off on a strike vote. But the Screen Actors Guild is sticking to the threat as it puts out feelers to the big studios ahead of contract talks due to start in earnest next month.

Some 250 million DVDs were purchased in the UK alone last year, with 2.3 billion disc sales worldwide generating revenues of $35.4bn (£17.5bn), according to technology research firm Screen Digest. The year 2007 was a record for the value of sales, and one of the fastest-growing revenues streams for studios is DVD box sets of TV shows.

The price of traditional DVDs has been falling, due to pressure from retailers and competition from web content, but Screen Digest is projecting a 7 per cent per-year decline in the value of worldwide sales in the next few years, which will take some time to erode the lucrative market.

And then there is Blu-Ray. This is the Sony-developed high-definition DVD format whose sales will grow from a nominal amount currently to contribute significantly to studios' bottom lines. Take-up of the new format has been limited until now, with Blu-Ray fighting competition from HD-DVD, but studios have begun lining up behind the Sony initiative and HD-DVD went the way of Betamax last month.

"Blu-Ray will bring additional value to the market," says Richard Cooper, an analyst at Screen Digest. "These discs have much higher selling prices not just because of their higher picture and audio quality but also because of the value-added material such as interactive content and web-enabled games. The take-up of Blu-Ray should correct the recent average decline in DVD prices, and after a few lean years, we expect that the money spent on DVDs will be back to its 2007 high in 2010."

George Clooney et al point to the hardship that was inflicted on actors between November and February, as work dried up during the writers' strike, and some estimates put the damage to the Los Angeles economy at $2bn. DVD sales could take an additional dent this year because those box sets will have to be slimmer than usual, given the production stoppages which canned a whole series of 24 and half a series of Lost, for example.

Nervous actors are fearful that the losses already sustained will make the studios even less willing to deal. Major networks found that – despite the grumbling – they could get by with reality programming, and there is likely to be more of it in future. There are also likely to be big cutbacks in the number of pilots produced for new dramas – a staple of acting work on the West Coast – only a fraction of which see the light of day.

Many are now urging the Screen Actors Guild to do a quick deal similar to that carved out by the writers, and lift the threat of strike action when the existing contract expires in June. But while Alan Rosenberg, the union's president, has begun informal talks with studio bosses – such as Peter Chernin of Rupert Murdoch's News Corp, owner of 20th Century Fox, who was instrumental in ending the writers' strike – he makes no promises of an early compromise.

"DVDs will generate billions in revenue for the studios and networks for years to come," he told members after directors agreed a new contract recently that excluded rises in DVD royalties. "No one should assume this deal is a template for anyone else, certainly not for actors. Each guild must act in the best interest of its own membership, including rejecting management-imposed pattern bargaining."

In other words, here we go again.