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Industry Can Celebrate Great First Half As It Heads for Vegas

27 Jul, 2003 By: Kurt Indvik

The home video industry continues to run at full steam going into this week's Home Entertainment 2003 in Las Vegas. The tremendous growth studios and retailers are experiencing will lend not only a celebratory air to the event, but a heightened sense of significance to the issues the industry faces as it continues in its evolution.

Revenue from rental and sales of home video at the midyear point are up a resounding 15.7 percent from last year at this time, according to Video Store Magazine market research. VSM's research team presents a comprehensive mid-year report on the industry in this week's issue, and all signs are pointing to a tremendous year.

It is particularly exciting to see that the rental business is up 6.5 percent to date from last year, even as video sales have soared 23.6 percent.

It's all about DVD, and the disc has generated not only tremendous sales and revenue gains, but has spawned several new revenue streams for the industry, which have contributed to its overall growth.

Consider, for instance, that through the first half of this year, rentailers have sold nearly $500 million in previously-viewed video product, according to VSM market research. The used market is on its way to being a $1 billion business by the end of the year. That's a major hunk of change and one that rentailers are going to continue to seek ways of expanding.

Also consider that the online rental business generated about $100 million in revenue, according to VSM market research estimates. Clearly, Netflix has the lion's share here, but the model has been proven to be an attractive option for consumers that has also prompted such heavyweights as Blockbuster and Wal-Mart to enter the game.

No doubt these two revenue streams, which would not have existed were it not for DVD, have contributed to the growth of the business even as VHS continues its natural decline.

The exciting growth in both new and established business lines notwithstanding, retailers and studio execs meeting in the sold-out suites at the Venetian and enjoying themselves during a maxed-out schedule of parties, know that there is a lot at stake for everyone as they negotiate deals going forward. Some of the pre-show buzz issues like emerging rev-share programs, high-definition DVD and others can also lend an air of healthy tension to what is continuing to be a dynamic and resurgent business that has great things in store.

If you're headed for Vegas, enjoy the celebration and get ready for an exciting second half of 2003.

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