I agree with both Lee and Chip, something does indeed sound fishy there.
There will always be a "need" for DVD Products for consumers. They will always want the DVD, the artwork, the physical product in their hands.
On another note, are they dying? Yes, I do believe so. But I do not think that the DVD production aspects of the adult industry will ever stop.
What I think is happening here is that the consumers can access all of the porn they want on the internet for a cheaper cost IE: AEBN. And not have to leave the house to get their porn, they can do it right from online.
Is it dropping, yes I would say it is. But dead, nah.. never.