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Friday, January 03, 2003
 DVD explosion fuels the fire for home vid market
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Message Text: A preliminary survey of the home video industry shows that DVD sales saw a 65% increase to an estimated total of $8.9 billion last year, compared with $5.4 billion in 2001. Although VHS sales declined an estimated 29%, from $4.9 billion in 2001 to $3.5 billion last year, the combined total of consumer dollars spent on purchasing home video should top $12.4 billion, up 24% from the combined DVD and VHS sell-though total of $9.5 billion in 2001, according to several industry sources.

That $12.4 billion sales figure far exceeds the entertainment industry's record-breaking boxoffice of $9.4 billion last year, which is expected to be finalized next week when final numbers are tallied.

Perhaps not surprising because of the widespread acceptance of the DVD format -- nearly 50 million American households now have DVD players -- is the fact that sales of family titles, those rated G or PG, increased 90% in 2002, reaching nearly $2 billion. And that dollar figure could be eclipsed when final numbers are added up next week, studio sources say.

On the rental front, consumer dollars spent on DVD rentals jumped a whopping 114% to about $3 billion last year, compared with an estimated $1.4 billion in 2001. The increase is largely attributable to a fundamental shift in business strategies made this past year by such national video rental chains as Blockbuster and Hollywood Video to combat revenue loss from DVD sales. At Blockbuster, for example, about 50% of the titles available for rent are on DVD.

While DVD has witnessed the fastest increase in rental spending since the advent of home video more than 20 years ago, VHS continues to earn the lion's share of rental dollars. That said, consumer spending on VHS rentals was down 24% to an estimated $5.3 billion last year, compared with about $7 billion in 2001.

Meanwhile, consumer transactions in the entire home video market, including sales and rentals, were up 9% last year, but consumer spending during that same period increased an estimated 21% because of the higher relative cost of the DVD format compared with VHS.

A complete market-share analysis and studio-by-studio breakdown will be published next week in The Hollywood Reporter.
 
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