2006 Year in Review: JULY
1 Jan, 2007
By: Thomas K. Arnold
Continuing a slow but steady decline that began in 2005, consumer home video spending slipped 3.7% in the first half of this year to $10.9 billion, according to preliminary estimates from Home Media Research. Video purchases are down 3.6% to $7 billion, while rentals slipped 3.9% to $3.9 billion. Studio executives attribute the decline to several factors, including a slowdown in new DVD releases, price erosion at retail, a final shakeout of VHS and less-aggressive buying among the last wave of DVD converts. Studios are increasingly turning to viral video Web sites such as YouTube to promote their upcoming DVDs, just as their theatrical counterparts are doing with movies. Promotional efforts go beyond the mere posting of trailers and include contests, sweepstakes and giveaways. The annual VSDA Convention returns to Las Vegas with show organizers on a two-pronged quest: take care of the trade group's core membership of independent rental dealers with nuts-and-bolts seminars and workshops and, at the same time, step into the future with a focus on next-generation packaged media and digital downloading. And so, to get to an HD DVD demonstration, attendees had to walk through a show floor populated by popcorn, concession and disc-repair booths — while the Blu-ray Caf? was around the corner from seminars on indoor tanning and cost cutting. Another nail was pounded into the coffin of movies for the PSP when Target Stores stopped selling UMDs, citing little sales activity. Are independent retailers really down to about 15% of the home entertainment business? Officially, yes, but a new study shows those estimates may be diluted by the proliferation of sideways buying, in which retailers eschew traditional distribution channels and instead buy from the nearest Wal-Mart or Costco. A survey by Home Media Research found 52% of indie retailers buy their DVDs at discount chains and then redirect them into their rental or sellthrough inventories. The nascent digital-download market gets a big shot in the arm when the two leading services, Movielink and CinemaNow, announce plans to allow consumers to burn downloaded movies on DVDs playable on their set-top machines. Observers had cited the inability of consumers to do so as the biggest obstacle to digital downloading's growth.
Studios increase promotional efforts over viral video sites such as YouTube.