DVD may have killed the video star, but the format, which has soared in popularity in the past ten years, is expected to decline this year.

Figures released yesterday by the British Video Association revealed that the past year had marked a record for the British video market, generating 9 per cent growth in the number of DVDs sold.

But industry experts have told The Times that this trend was a one-off. They say that DVD sales are about to wilt in the face of increasingly powerful competition.

The DVD market is under attack on multiple fronts, including competitive pricing from supermarkets selling DVDs as loss leaders and an impressive roster of films and television programmes on offer on satellite and digital television and for legal download on the internet.

DVDs managed to overcome these challenges last year.

Poor summer weather and a particularly strong year for new releases, including Harry Potter and the Order of the Phoenix, Shrek the Third and Transformers, coupled with decreasing prices — the average DVD cost £9.38 — made 2007 a particularly strong year.

The number of DVDs sold reached 250 million for the first time, giving the British DVD market a value of £2.3 billion.

In 2006, the market was worth £2.2 billion, with 229 million DVDs sold.

Yet industry insiders believe that it cannot last. Lavinia Carey, the director-general at the British Video Assocation, said: “We expect 2008 to be the first year that the value of the DVD market will fall. Then the market will plateau. In 2009, DVD sales will be flat, but we predict Blu-ray will provide growth in 2010.”

Richard Cooper, an analyst for Screen Digest, has predicted that the DVD market will fall by 7 per cent in terms of unit sales.

“The vast majority of DVDs were sold as gifts in the fourth quarter,” he said, adding that this year would not be as strong in terms of releases and that Christmas DVD sales would not be as healthy.

Ms Carey said that additional pressure on the DVD market would start to come into force this year, highlighting a greater impact from Sky Plus and video-on-demand services.

Theatre-to-DVD and DVD-to-television release dates are shortening and this trend is expected to continue.

Personal Video Recorders, such as Sky Plus, are enabling people to record and store their favourite programmes, again decreasing the appetite for DVDs.

Ms Carey said that legal download services, such as BBC iPlayer, which is simple to use and is increasing in popularity, will become more widely used.

She recognised that there were an increasing number of people who were not buying or renting DVDs, but were willing to wait for films to appear on services such as Sky Box Office.

Mr Cooper added that the sale of DVD players had almost reached saturation point.

Yet the industry is not ready to announce the demise of the DVD, suggesting instead that the market will merely bottom out.

Gennaro Castaldo, of HMV, said that the retailer, which has come under pressure in recent years from cut-price supermarket and internet offers, was concentrating on what he called quality and collectibles.

“DVDs will always be an aspirational product,” he said. “People often want to own the product and box sets are still very popular.”

Mr Castaldo said that the group had achieved record DVD sales at Christmas.

He predicted a strong 2008 for DVD sales, suggesting that the credit crunch would mean that people stayed at home more, happily spending £10 on a DVD.

Ms Carey said that the video market would get a boost in 2010 from the increased popularity of Blu-ray.

The new high-definition formats Blu-ray and HD-DVD sold 1.1 million units last year.

Now that the format war is over and people know which to buy, analysts expect stronger sales of Blu-ray players.

Yet one challenge remains. Thousands of consumers who have HD-enabled televisions believe, incorrectly, that they are watching high-definition television and fail to understand the need for Blu-ray.

Ms Carey said that an industry-wide campaign was planned for this year to explain the benefits of the format.

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