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Appeared on: Monday, October 09, 2006
HD-DVD Key to Home Video Revenue Growth

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.


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