Q3 slows year-to-year DVD skid

'Knocked Up,' 'Heroes' among encouraging signs

A strong third quarter helped ease the gap in consumer DVD spending between this year and last, with the latest Nielsen VideoScan numbers showing a year-over-year decline of just 5% for the first three quarters of 2007.

Earlier in the year, VideoScan data showed a shortfall of 6% at the year's midpoint, June 30, and nearly 8% at the end of the first quarter.

VideoScan factors in point-of-sale data from most major U.S. DVD sell-through retailers, with the exception of Wal-Mart, which accounts for about 40% of the domestic DVD sell-through market.

Home Media Magazine market research pegs total consumer spending on home video purchases during the first nine months of 2007 at $8.8 billion, down 4.4% from the estimated $9.1 billion consumers had spent from Jan. 1-Sept. 30, 2006. Rental spending, according to Home Media Magazine market research estimates, finished the third quarter at $5.5 billion, down 2.8% from the total in the first nine months of 2006. Combined, home entertainment spending by consumers on DVD purchases and sales is off a modest 3.8% from last year.

Mike Dunn, worldwide president of 20th Century Fox Home Entertainment, said the dwindling disparity between consumer DVD spending in 2006 and 2007 is an encouraging sign that consumers are still keen on packaged media.

He said strong sales and rental activity directly correlate to the strength of titles in the market. Based on the wealth of high-profile theatricals coming to market in the remaining three months of the year, Dunn said, the home entertainment business could be in for a most welcome upturn.

"This past quarter's strong performance closed the gap even further," Dunn said. "Given the strength of the current quarter, we are confident the industry will finish the year in positive territory."

Indeed, the third-quarter lift is thanks largely to studios' pumping out marquee titles earlier in the year to avoid a traffic jam of hits in the fourth quarter. Warner Home Video released "300" in late July and found buyers more than happy to snap up the DVD, as well as the Blu-ray Disc and HD DVD versions. The actioner, in fact, set a record in high-definition disc sales, selling more than 250,000 copies its first week in stores.

Universal Studios Home Entertainment also released two major titles before the fourth quarter, bowing Season 1 of NBC's "Heroes" in August and the surprise boxoffice hit "Knocked Up" in September.

Indeed, "Universal's biggest third-quarter DVD successes came in the form of TV-DVD titles," said Craig Kornblau, president of Universal Studios Home Entertainment. "Heroes," he said, is Uni's top-selling TV-DVD release to date.

"Knocked Up" sold 3.5 million DVDs in its first week in stores.

Kornblau believes the lift will play out through year's end.

"Given the overall highly anticipated lineup of boxoffice blockbusters coming to market in the coming weeks," he said, "the industry is on track to significantly benefit from one of the biggest fourth quarters in recent years."