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2008 Off to a Good Start

By : Thomas K. Arnold | Posted: 17 Apr 2008

The home video industry received a rosy report card for the first quarter, with a surprising lift in consumer spending after two down years.

Consumer spending on DVDs and Blu-ray Discs in the first three months of this year was up about 1% from the first three months of 2007, coming in at $5.51 billion, up from $5.46 billion in the first quarter of last year, according to Home Media Magazine market research estimates based on studio and retail data.

Sales were up 2.3% to $3.47 billion, from $3.39 billion, while rental spending slipped 1.6% to $2.04 billion, from $2.07 billion.

The cheery sales picture also saw unit sales to consumers rise 2.6% to 231,928 units, from 225,999 units in the first quarter of 2007.

And according to Nielsen VideoScan sales data, the nascent Blu-ray Disc saved the day for the sellthrough business, with DVD unit sales in the first quarter down 1.2% from the first quarter of 2007 but Blu-ray Disc sales up a whopping 351%.

That translates to a net gain of 1.1%. Nielsen numbers are based on point-of-sale data from most big retail chains, with the notable exception of Wal-Mart.

Studio executives were buoyed by the overall numbers, which in many cases reflect their own experiences so far this year.

“The industry is off to a nice start for the year — we are even in a slightly better position than we were at this time last year,” said Kelley Avery, president of Paramount Worldwide Home Entertainment. “At Paramount, we've paced ourselves with a solid line-up in Q1, followed by a steady release schedule as we strategically spread out our titles throughout each quarter this year.”

Steve Beeks, president and co-COO of Lionsgate, said the mini-major had the best calendar quarter for home entertainment in its history, with a market share of 9%, up from 6.8% in the first quarter of 2007.

“Lionsgate and the home entertainment industry both got off to a fast start in 2008,” Beeks said.

He noted that DVD was holding its own, with new-release DVD sales only slightly below new-release DVD sales in the first quarter of 2007, even though their collective box office value was 9% less than in the year-ago quarter. Catalog sales, meanwhile, were up 2%, while Blu-ray's phenomenal unit sales gains were magnified by the format's higher margins.

“Blu-ray had its second-best week ever in the week ended March 23, and we anticipate Blu-ray sales of $800 million to $1 billion-plus for all of 2008, up dramatically from approximately $300 million last year,” Beeks said. “Fueled by this growth in the high-margin sector of the packaged-media business, as well as by 27% growth in VOD and digital spending, we expect the home entertainment industry overall to grow in 2008 and continue growing in 2009.”

Independent home video suppliers also are reporting an up first quarter. At Anchor Bay Entertainment, both overall first-quarter results and Blu-ray Disc sales are “trending ahead of expectations,” said president Bill Clark.

In terms of studio market share, Warner Home Video, buoyed by its distributed New Line Home Entertainment and HBO Video lines, snagged 20.1% of total consumer home entertainment spending in the first quarter of this year.

Walt Disney Studios Home Entertainment came in second, with a market share of 14.8%, according to Home Media research estimates.

Disney, as always, was particularly strong on the sellthrough front, with five of the top 10 DVD sellers, led by Enchanted, the year's No. 2 seller, overall. Disney also claims the top-selling re-release (101 Dalmatians) and the No. 1 direct-to-video title (Snow Buddies).

Finished third in the Q1 market share derby was 20th Century Fox Home Entertainment with 12.2% of overall consumer spending on DVD purchases and rentals, combined. The figure includes MGM Home Entertainment titles, which the studio distributes. Sony Pictures Home Entertainment came in a close fourth, with 11.8%, followed by Universal Studios Home Entertainment and Paramount Home Entertainment, neck and neck with respective market shares of 10.5% and 10.4%.

Lionsgate finished just behind the six majors with a 9% market share, its best ever. And Genius Products, fueled by theatrical product from The Weinstein Co., continued to be a factor with a market share of 2.2%.


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