Industry optimistic as Home Media Expo opens

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LAS VEGAS -- Home Media Expo 2007, the latest incarnation of the video retail community's annual convention and trade show, opens Tuesday in its traditional location here at a time when the home entertainment industry is in a state of flux.

The core DVD business is down -- Home Media Magazine market research estimates consumer spending on DVD sales, the industry's most telling barometer, were off about 3% at the year's halfway point -- and shipments of DVDs in the first six months are off 16.7%, according to a just-released study by the DVD Release Report.

And yet with high-definition disc and digital delivery both gaining traction, and a bumper crop of high-profile theatricals headed for DVD in the second half of this year, industry leaders are optimistic about the future.

It's not surprising, then, that the Entertainment Merchants Assn., which produces the annual video retail show, on Monday released its annual report that shows the DVD business is still, by far, the dominant Hollywood cash cow.

The EMA report puts total consumer spending on DVD sales and rentals in calendar 2006 at $23 billion, slightly lower than the conventionally accepted number of $24.2 billion released last January by DEG: The Digital Entertainment Group. But even the EMA's lowball estimate outshines the amount of money consumers spent on movie tickets ($9.5 billion) and movies-on-demand delivered by cable, satellite or the Internet ($982 million).

"While consumers are viewing filmed entertainment through an increasing variety of devices and services, they remain loyal to DVD," EMA president Bo Andersen said. "DVD will continue to be the most popular way for the public to view movies for the foreseeable future, and we expect high-definition discs to become the dominant home video format within five years."

The report also found that mass merchants like Wal-Mart and Target continue to dominate the DVD sales market, with a 43% market share, followed by consumer electronics retailers at 16% and online retailers at 12.5%. In the rental market, publicly traded video chains like Blockbuster control 43% of the business, other video stores have 39% and online rental services have 16%.

Home Media Expo, which began life in 1982 as the annual convention of what was then called the Video Software Dealers Assn., has changed with the times. Instead of a big show floor with elaborate booths and photo-signing, camera-mugging stars the studios once used to woo the indie retailers who once dominated the business, the expo now is limited to a series of suites at the host Venetian Resort Hotel and Casino where studio and independent DVD supplier executives hold private meetings with key retailers.

The list of retailers attending the show, accordingly, has changed as well. While indies still dominate, some of the country's most important retailers of home entertainment software have made the annual trek to Las Vegas, including executives with such big retail chains as Best Buy, Target Stores, Amazon.com, Fry's Electronics, Costco and Circuit City.

Their attendance, studio executives say, keeps the show relevant -- and keeps them coming to Las Vegas.

"I think the newer format makes for a much more productive environment to get business done with a very viable group of our important retail partners," said Craig Kornblau, president of Universal Studios Home Entertainment.

"We've got meetings with most of our major customers," added Steve Nickerson, senior vp HD media at Warner Home Video. "We participate in other trade shows throughout the year, but they have other focuses besides software."

Home Media Expo this year has about 130 exhibitors, including most of the major studios. Opening day will be capped with the annual Home Entertainment Awards show, where the top DVDs of the past year will be honored.

Also at the awards show, veteran actor Ernest Borgnine will be honored for Sustained Creative Achievement, Jon Favreau will receive the Independent Career Achievement Award, Katt Williams will be named Rising Entertainer of the Year, and FunnyorDie.com will be tapped as Creative Website of the Year.
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