For a change, no rewind on home video spending

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The domestic home video business got a rosy report card for the first quarter, with a surprising lift after two down years.

Consumer spending on DVDs and Blu-ray Discs in the first three months of the year was up about 1% to $5.51 billion when compared with the first three months of 2007, according to Home Media Magazine market research estimates based on studio and retail data.

Sales were up 2.3% to $3.47 million, while rental spending slipped 1.6% to $2.04 billion.

The cheery sales picture also saw unit sales to consumers rise 2.6% to 231,928 units from 225,999 units in first-quarter 2007.

The nascent Blu-ray Disc saved the day for the sell-through business, per Nielsen VideoScan sales data, with DVD unit sales in the first quarter down 1.2% from 2007 but Blu-ray Disc sales up a whopping 351%. Nielsen numbers are based on point-of-sale data from most big retail chains, with the notable exception of Wal-Mart.

Consumer spending on home video has been sliding, albeit slightly. In 2007, total spending was off 0.5% to $23.7 billion, and the number dipped 0.4% to $24.2 billion in 2006.

Studio executives were buoyed by the industry's first-quarter performance, which in many cases reflects their own experiences this year.

"The industry is off to a nice start for the year — we are even in a slightly better position than we were at this time last year," said Kelley Avery, president of Paramount Worldwide Home Entertainment.

Steve Beeks, president and co-COO of Lionsgate, said the minimajor had the best calendar quarter for home entertainment in its history, with a market share of 9%, up from 6.8% in first quarter 2007.

"Lionsgate and the home entertainment industry both got off to a fast start in 2008," Beeks said.

He noted that new-release DVD sales were only slightly below those same sales in the first quarter of 2007, even though their collective boxoffice value was 9% less than in the year-ago quarter. Catalog sales, meanwhile, were up 2%, while Blu-ray's phenomenal unit sales gains were magnified by the format's higher margins.

"Blu-ray had its second-best week ever in the seven days ending March 23, and we anticipate Blu-ray sales of $800 million to $1 billion-plus for all of 2008, up dramatically from about $300 million last year," Beeks said. "Fueled by this growth in the high-margin sector of the packaged-media business as well as by 27% growth in VOD and digital spending, we expect the home entertainment industry overall to grow in 2008 and continue growing in 2009."

In terms of studio market share, Warner Home Video, buoyed by its New Line Home Entertainment and HBO Video lines, snagged 20.1% of total consumer home entertainment spending in the first quarter of this year.

Walt Disney Home Entertainment was next with a market share of 14.8%. Disney, as always, was particularly strong on the sell-through front, with five of the top 10 DVD sellers, led by "Enchanted," the year's No. 2 seller, overall.

Fox Home Entertainment was third in the Q1 market share derby with 12.2% of overall consumer spending. The figure includes MGM Home Entertainment titles, which the studio distributes. Next were Sony Home Entertainment (11.8%), Universal Studios Home Entertainment (10.5%) and Paramount (10.4%).
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