DVD slowdown eases, but prices still falling
EmptyThe third quarter is ending on a mixed note for DVD suppliers: The consumer video spending slowdown of the past 18 months appears to be leveling off, but price erosion at retail continues to affect the market.
Consumer home video spending for the first nine months of the year is projected to be down 1.6% from the same nine-month period in 2005, to $15.9 billion, according to Home Media Retailing's market research department.
At midyear, consumer spending was down 3.7%, so the market has picked up some steam.
Preliminary figures for the nine-month period ending Sept. 30 indicate consumer spending on video purchases likely will be off about 1.2%, to $10.2 billion, while rental spending is projected to come in at about $5.8 billion, a decrease of 2.4% from the year-ago period.
Still, consumers are buying lots of DVDs.
Unit sales for the nine-month period, meanwhile, are tracking to be up 4%, fueled by a projected 9% increase in unit sales during the third quarter. Video-purchase spending for the third quarter is projected to be up 4%, propped up by strong sales of pricier multidisc TV-DVD collections like Buena Vista Home Entertainment's "Lost."
Analyst Tom Adams, president of Adams Media Research, said any notions that consumers are tiring of DVD are premature. Indeed, while in 2005 consumer home video spending was slightly down, this year Adams projects spending to move into the positive territory, albeit by a mere 0.6%, driven by a strong slate of fourth-quarter product.
"The big reason the business is flat is we are at near-saturation levels with DVD," Adams said. "I haven't seen any consumer research or studio research that says the long-term owners of DVD players are cutting way back on purchasing."
In market share, Warner Home Video, as usual, leads the pack with a 19.4% share of consumer spending on video purchases and rentals, according to studio estimates. Buena Vista Home Entertainment is second, with 14.2%. Lionsgate rounds out the Big Seven with an estimated 5.8% share.
The top-selling DVD of the third quarter is Buena Vista's "High School Musical," which has now sold through to consumers about 3 million units, according to Home Media Retailing estimates.
The five top-selling DVDs so far this year remain unchanged from midyear, though incremental sales have been added to the total. They are: Buena Vista's "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe" at No. 1 with 11.9 million units sold, followed by Warner Home Video's "Harry Potter and the Goblet of Fire" in second place with 11.1 million units.
New Line Home Entertainment's "Wedding Crashers," released in the lucrative early-January slot, came in third with estimated DVD sales of 8.4 million units, followed in fourth place by Universal's "King Kong" and 20th Century Fox Home Entertainment's Johnny Cash biopic "Walk the Line," both of which have sold through just north of 7 million units.