Summer b.o. translates to Q4 video bonanzaIf this was any other time, home entertainment executives would be weeping in their apple martinis. First-quarter DVD sales were down nearly 8% compared with the same quarter a year ago, and the latest statistics from the "DVD Release Report" shows that DVD unit shipments for the first four months of the year are off a staggering 14.7% from the year-ago period.
Was it really just a year and a half ago, when DVD sales finished the year flat, that everyone was crying that the sky is falling?
The difference is that this time there's a light on the horizon — a big, fat, shining light, so bright that virtually everyone is expecting a veritable bonanza once the fourth quarter rolls around.
Just look at the boxoffice and there's the first reason home entertainment executives are all smiles these days: a trilogy of threequels with opening-weekend tallies of well more than $100 million, each of them most likely arriving on DVD in the weeks before Christmas and not only setting record sales numbers but also bringing droves into stores who quite likely will buy other DVDs as well. And it's just the beginning of the summer, with more theatrical blockbusters — and fourth-quarter DVD releases — to come.
Next, take a trip to the friendly neighborhood Wal-Mart or Target. See any videocassettes? I didn't think so. Those clunky VHS cassettes have been a drag on consumer spending almost from the day DVD debuted, particularly in recent years as the dreaded format was finally (and mercifully) phased out. Now, with apologies to Richard Nixon, we won't have VHS to kick around anymore, so consumers who buy their entertainment in packaged form have no choice but to buy it on DVD.
However, that's not entirely accurate, and this brings me to the third reason home entertainment appears to have a rosy future, at least in the short term. For more or less a year now, we've been hearing about this devastating format war between Blu-ray Disc and HD DVD, a battle that would confuse consumers and prevent either format from finding much of an audience.
Well, guess what? People are confused by high definition, period, with at least one major study showing that consumers think all they need to watch anything in high-def is a high-definition TV and everything will magically transform. If there was only one high-def format on the market, they'd be just as confused — and probably more reluctant to buy high-def disc players because the price would be a lot higher.
The Blu-ray vs. HD DVD battle has driven down player prices to almost ridiculously low levels. And while it is true that early adopters aren't necessarily price conscious, the next wave of adopters is, so being able to buy a Toshiba player for $299 or a Panasonic for $599 is certainly going to beef up sales.
What's more, the Hollywood studios are stepping up efforts to promote next-gen discs and tapping some high-profile titles as well. Buena Vista generated serious sales numbers recently with its two Blu-ray "Pirates of the Caribbean" releases, which collectively sold nearly 45,000 units in their first week in stores. And Warner's two HD DVD-only "Matrix" collections, released on the same day as "Pirates," turned a nice chunk of coin as well, generating nearly $1 million in consumer spending, again in just a single week.
It's a good time to be in home entertainment.