LONDON — Piracy, falling prices and the rise of online viewing are continuing to drag down homevideo revenues in foreign markets despite the rapid growth in sales of Blu-ray discs, according to a report from research org Global Media Intelligence.

Consumer spending on video, DVD and Blu-ray — both retail and rental — outside North America fell to $26.4 billion last year, down 3.6%. This year is forecast to see a further 2.5% decline.

Sales of DVDs, which make up 68.6% of homevid spending abroad, totaled $18.1 billion, down 4.7% despite a 6.4% rise in units sold to 1.2 billion, as the average price fell 10.5%.

Sales of Blu-ray discs rose more than fourfold last year yet contributed only 1.8% of total homevid spending. As Blu-ray revenue increased to $482 million, DVD retail spending fell $894 million.

Blu-ray income is predicted to rise to 6.4% of international homevid spending this year. However, further growth will rely on strong promotion of the format in the face of the recession, said GMI.

Consumers are fast losing the rental habit, said the org, with rental revenue dropping 17% in the past five years to $7.5 billion.

The top five international markets — Japan, the U.K., Germany, France and Australia — made up 70% of total international homevid revenue. 

Japan saw a 4.2% drop in total homevid spending last year to $7.1 billion, while spending in the U.K. fell 3.2% to $4.7 billion.

The biggest drops were in Italy, where spending fell 15.7% to $900 million; Spain, down 14.4% to $600 million; and Brazil, which recorded an 11.8% decline to $600 million.

The top three emerging markets, Russia, China and India, saw double-digit growth in 2008, but they still contributed little — $979 million combined. This is less than Australia on its own, which generated $1.9 billion. Russia made up 2% of total video business, China and India 1% each.