The homevideo biz’s hopes for a happy ending for 2007 don’t seem to have come true.

Final results for the year are trickling in — and they all show significant erosion in DVD sales, despite a tsunami of B.O. hits hitting shelves over the holiday season.

On Monday, the Digital Entertainment Group released figures putting the dip in domestic DVD sales at 3.6%, a slight improvement over earlier tallies that showed a 4.5%-5% drop.

These figures fall within the 3%-5% declines forecast by several home vid toppers in mid-December (Variety, Dec. 17-23).

However, at that point, the most bullish of vid biz execs were still holding out hope that a final flurry of holiday sales would lift the business back into the black after a year in the hole.

The DEG, which draws its research in collaboration with the vid arms of the majors and indie labels, pegged 2007 DVD sales at $16 billion, down $600 million from the previous year, with DVD rentals holding flat at $7.5 billion. Org tallied $23.4 billion in consumer spending on DVD, down nearly 3% from the previous year.

Popular on Variety

Several of the year’s top sellers on disc, including “Transformers” and “Pirates of the Caribbean: At World’s End,” came out in the latter part of the year, competing with earlier sales leaders such as “300” and “Happy Feet” for year-end honors. Late-year discs such as “Ratatouille,” “Shrek the Third” and “Harry Potter and the Order of the Phoenix” also sold well in the waning days of 2007.

According to DEG, high-def discs and VHS titles still in circulation added a fraction more to the overall spending tally of $23.7 billion, down 2% from $24.2 billion in 2006.

High-def formats didn’t make up for the declines in standard DVD format, now well into its maturity. According to the DEG, consumers spent $300 million on Blu-ray and HD DVD discs over the course of the year. Org did not break this tally down between the rival Blu-ray and HD DVD formats.

Although the vidbiz can take heart in the fact the rental segment remained flat, studios have a much bigger stake in DVD sales, which they rely upon to cover costs incurred during the production and marketing of a film’s theatrical window.

Earlier tallies showed slightly higher declines in DVD sales: Last week, VideoScan point-of-sale data registered a 5% decline in DVD sales for the year, but those figures don’t include Wal-Mart sales. And longtime home video analyst Tom Adams earlier projected a 4.5% dip in DVD coin for studios; his company, Adams Media Research, is still finalizing its numbers for the year.

However, the news could have been much worse for the vidbiz: Earlier in the year, sales declines were in the double-digit range, and the industry made up significant ground as studios released a fusillade of box office hits from the summer.

And many are no doubt taking heart from Warners’ decision to throw its weight behind Blu-ray exclusively; there’s been a growing belief, among those in the Blu-ray camp especially, that a quick resolution to the high-def format war will jump-start sales in the coming year.

Indeed, Warner homevid execs suggested they were adding to consumer confusion by supporting both formats and blamed the format war for the slowdown in standard DVD sales.