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Expectations Return to the Real World

7 May, 2007 By: Thomas K. Arnold

Historically, if business had been as soft as it has been so far this year, industry executives would be in mourning. A decline in consumer spending of nearly 8% on DVD purchases would have been seen as a sure sign of disaster.

Heck, who can forget the end of 2005, when the final numbers for the year revealed total consumer spending to be off by maybe a point? Everyone ran around screaming that the sky was falling — until someone fingered sagging rentals as the culprit and pointed out that sales were actually up, albeit not nearly as dramatically as in years past. A surefire disaster became a “correction,” and everyone was smiling again.

Then, last year, the business finished slightly down again. This time, the culprit was pegged as the last remaining falloff in videocassette sales, and after just a short period of hand-wringing everyone was fine again.

Now comes word that first-quarter 2007 DVD sales are off significantly from what they were in the first quarter of 2006. But no one is singing the blues, even though we can't blame this particular downturn on rentals (not a factor) or VHS (irrelevant).

Why no glum faces? Because we're finally back in the real world, and we no longer feel any need to rationalize away our momentary woes. One look at the weak slate of theatricals that have come to DVD so far this year shows us, realistically, that there's no way we could expect business to be up, or even flat. We've left La-La Land, when DVD spending experienced double-digit gains each year regardless of what was coming out, and come back to earth, where sales are product driven.

Instead of looking at the down sales numbers and wondering whether consumers have tired of DVD, we are looking ahead at the remainder of the year and seeing a wealth of high-profile theatricals coming our way that will undoubtedly translate to boffo DVD sales down the road.

We've learned to manage our expectations, that's all. We're finally realizing that the home entertainment business, like all industries, will always have its ups and downs — and you've just got to hang on and ride it out.

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