* Q1 loss $0.40/unit vs $0.06/unit a year earlier
* Revenue falls on drop in demand and prices for CDs, DVDs (In U.S. dollars unless noted)
TORONTO, May 1 (Reuters) - Cinram International Income Fund CRW_u.TO posted a bigger quarterly loss on Friday as both demand and prices for the CDs and DVDs that it makes dropped sharply.
Cinram said it lost $22.3 million, or 40 cents per unit, in the three months ended March 31. That compared with a loss of $3.4 million, or 6 cents a unit, a year earlier.
Revenue dropped to $303.1 million from $373.8 million, the company said.
Sales at its main home video segment -- which includes replication and distribution of DVDs and high-definition discs -- fell 21 percent because of lower volumes in North America and a drop in prices around the world.
The CD segment also fell, with revenue dropping 30 percent as replication demand eased.
Video games were a bright spot for the Toronto-based company. Revenue rose 8 percent in that category, Cinram said.
The company has had to contend with legal digital music sales, as well as illegal downloads of music and movies. These factors have meant people are spending less on purchasing hard-copy DVDs and music discs.
Cinram reported its results after markets closed. During the day, its units gained 4 Canadian cents to close at C$1.14 on the Toronto Stock Exchange.
$1=$1.19 Canadian Reporting by Wojtek Dabrowski; editing by Peter Galloway