German DVD profits dip despite record sales

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COLOGNE, Germany -- DVD sales are hitting record levels in Germany, even as price gouging cuts into overall revenue.

Annual unit sales for sell-through titles crossed the 100 million mark for the first time in the territory last year, according to figures from local industry body BVV.

German retailers shifted 100.7 million DVDs in 2006, compared to 98.7 million a year earlier. In December alone, 18.6 million DVDs flew off the shelves, against 16.8 million in December 2005.

The record figure was thanks to a slate of top titles including "Mr. & Mrs. Smith" from Kinowelt, Warner Bros.' "The Island" and Buena Vista's "Flightplan."

But increased competition in the sell-through market has forced down prices. Last year a new release cost an average of €12.9 ($17), compared to €13.4 in 2005. Overall, sell-through profits fell 4% to €1.3 billion ($1.7 billion) from €1.4 billion a year earlier.

The rental market also suffered, in large part due to the 2006 soccer World Cup and a sweltering heat wave that drove German couch potatoes from their non-air conditioned homes and into the shade of public parks and beer gardens.

Rental revenue in 2006 dropped 11% to €284 million ($376 million) compared to €320 million in 2005. Rental unit figures fell to an all-time low of 112 million.

But Germany's DVD market is in no danger of losing its position as the territory's No. 1 entertainment sector. The industry's total profit of €1.6 billion ($2.1 billion) last year represented a 5.6% drop but was still almost double the €814 million ($1.1 billion) taken at the German boxoffice last year.
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