I don't really see this as a bad thing though. As long as it is not so much that they grow up unable to read. As a child I watched movies all the time and barely read anything. I did pretty well in school and was always in the top class for every subject.
Now I am older I enjoy reading much more than I do watching, and I find it much better.
I read Harry Potter and the Philosophers stone then afterwards watched the movie and it was just no where near as good as it had been in my head.
I know my children both read and watch Dvds. They watched a lot of vhs tapes growing up. I can cay that my sons and daughters know how to read just fine. I do not think that right now this is a bad for kids to spend time watching tapes as long as the parents take the time to teach them to read too.