A new study from Kagan Research reports that the mix of sell-through revenue is set to change as high-definition DVD takes hold of the marketplace.
"In 2006, the bulk of the $16.9 bil. revenue will come from standard-definition DVD ($16.8 bil.)," said Wade Holden, Kagan analyst. "By 2009, VHS will be virtually extinct and high-definition DVD revenue should grow to more than $2.6 bil. as the format war works itself out, either via one winning format or a combination HD DVD/Blu-ray player being introduced to the market. By 2015, VHS will be history and high-definition DVD will be the major-market shareholder with $18.3 bil. in revenue."
THE STATE OF HOME VIDEO reports that the boom times are gone for the home video industry and the situation may become worse in the wake of a high-definition DVD format war. Kagan estimates revenue will drop again in 2006, off 0.4% to $24.1 bil. The dip will come from the decline in rental revenues, off 8.3% to $7.2 bil. Sell-through revenue is estimated to grow 3.4% thanks to DVD revenue hitting $16.8 bil.
Other key findings and projections from THE STATE OF HOME VIDEO include:
Kagan expects rental revenue will continue to decline throughout the next decade as VOD technologies gain a larger following. Total rental revenue is estimated to be $4.2 bil. in 2015, posting a negative 5.8% CAGR for the decade.
Online revenue has been steadily increasing its share of the market, grabbing 17.2% in 2005, or nearly $2.8 bil. Online revenue has posted a 182% CAGR since 1997, a larger growth rate than the bricks-and mortar growth of 115%.
In 2005 Kagan tracked 491 titles released on DVD and estimates they made $9.2 bil. in wholesale revenue for the studios. The average wholesale price of a DVD grew 3.9% to $16.70 from $16.08 in 2004.