APAR's WORKING WEEKEND: I Want My DVD12 Oct, 2001 By: Bruce Apar
If you’re one of those who believe statistics do not lie, then you also might want to acknowledge DVD is not destined to be the rental engine that VHS was in its prime. As for DVD sales, that’s another matter entirely.
That was one of the trends discussed at a crowded seminar during the East Coast Video Show in Atlantic City this past week – DVD: Current & Future Trends – moderated by your Working Weekender.
The data this presenter hauled out was compiled by Video Store’s crackerjack research team, headed by associate publisher Judith McCourt. It shows that in 1998, one year after its U.S. market launch, consumer spending to own DVDs equalled 5% of that year’s total spend on VHS, which was $8.4 billion.
DVD jumped to 20% of VHS purchase spending in 1999, and to nearly 50% last year. For 2001, estimates Adams Media Research, the format’s fifth calendar year in stores, it virtually will match VHS for dollars spent on outright purchases, with each platform accounting for slightly more than $6 billion in sales.
In contrast, the consumer rental spending on DVD has flown largely below the radar. Video Store shows it as $600 million in 2000, compared with nearly $9 billion for VHS rentals. This year, DVD rental expenditures are estimated to max out at less than $1.5 billion, with VHS rentals declining slightly from 2000.
Combine that unmistakable collectible trendline with the fact that 88% of video specialty stores rent DVDs, while only about one-third sell the disks, and the math doesn’t quite add up. In other words, most rental outlets are competing for a limited DVD-rental pie, which a relative handful of stores are capturing their share of the rapidly expanding sales base for DVD.
Will this type of data once and for all put to rest the tiresome – and increasingly invalid – argument that “people don’t want to own every movie”? Well, consumers characteristically don’t rationalize their impulse purchases the way industry professionals rationalize what should or should not happen in the fickle marketplace. Which is to say, person A might not buy the movie person B does, so it’s true nobody wants to own every movie out there, but there arguably is a sizable segment of potential owners extant for even lesser movies – at the right price.
So far, the market data separating fast-and-furious DVD sales from modest DVD rentals supports that notion.
What is it about DVD that makes it eminently more ownable than rank-and-file movies on VHS? According to a Video Store survey of consumers last July, the top DVD-specific features that attracts customers are outtakes, deleted scenes and “making-of” featurettes, all of which are easily accessed on the digital format. Then come trailers/previews, language options, audio commentaries, and web links/DVD-Rom capability.
Rental is far from a shrinking violet on DVD, though. While Video Store’s Consumer Home Entertainment Study shows 76% of DVD player owners have purchased a disk in the previous year, 64% of DVD homes have rented a platter.
Still, as Netflix vp of strategic alliances and 20-year video retailer Mitch Lowe said on our DVD panel, it’s hard to imagine DVD rentals ever surpassing 60% of DVD sales, let alone matching sales dollar for dollar, as happened with VHS.
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