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Disc Sales Gain Momentum in August as Q4 Approaches

25 Sep, 2003 By: Judith McCourt

Action at the sales counter is heating up as the first of the year's mega-hits, notably The Lord of the Rings: The Two Towers, enter the home entertainment pipeline. Consumer sellthrough spending for August fell just shy of the $1 billion mark.

Video spending is tracking to hit $14 billion this year as consumer buying ramps up for the holiday season. With the strongest four sales months yet to come, consumers have already spent a record $7.93 billion buying videos, up a whopping 24 percent through the first eight months of 2003. DVD accounts for 84 percent of the mix at $6.68 billion, a 51 percent jump from the comparable year-to-date number in 2002. Year-to-date cassette sales total $1.25 billion so far.

August Disc Sales Soar
Sales for discs and tapes in August were $998.9 million, a 25 percent increase from August 2002. Sales adjusted for the four-week reporting period ran 31 percent above July's tally.

Consumers bought 42 percent more discs in August than they did in the same month of 2002. The increase in volume pushed revenue up 45 percent from the comparable period last year. DVD sales are pegged at $871.3 million for the month.

Cassette Sales in Free Fall
Cassette sales registered another month of steep decline, mirroring the decline in popularity of the VCR. The Consumer Electronics Association showed August 2003 VCR hardware sales off 67 percent for the month.

VHS unit sales for August echoed the drop, down 43 percent compared to the same month last year. Cassette volume accounted for 16.4 percent of the total August sales mix, down from 31.4 percent in August 2002, according to Nielsen VideoScan. Consumers spent $127.6 million buying tapes, a 35 percent dip from the $223.5 million spent in August 2002.

Towers a Record Breaker
New Line Home Entertainment's Two Towers, released Aug. 26, is a harbinger of consumers' continued enthusiasm for collecting DVD. In the first week of release, Video Store Magazine estimates fans bought 6.66 million copies of the Hobbit fantasy. Sales were heavily skewed to disc. First-week sales were 91 percent DVD, according to Video Store Magazine market research estimates.

In just its first week of release, Two Towers nabbed the No.3 DVD sales spot for 2003, closing in on 2003's current No.1 DVD seller, sister company Warner Home Video's Harry Potter and the Chamber of Secrets, at 9 million units sold on DVD.

Towers' first-week take landed it in the No. 15 spot of top DVD sellers of all time. Columbia TriStar Home Entertainment's Spider-Man holds the overall DVD sales record, with 12.7 million discs sold.

Warner Wins With Towers' Help

Almost half (49 percent) of consumer dollars spent on buying discs and cassettes in August were for Warner and Buena Vista Home Entertainment products.

Warner, which includes New Line, HBO and PBS, plucked a win in the market-share sweeps, with 25.7 percent of the units sold and 27.6 percent of consumer sellthrough dollars in August. Warner took 26.2 percent of the DVD and 23.2 percent of cassette unit sales, respectively, according to Nielsen VideoScan.

Buena Vista finished a close second in August market share, with 23.1 percent of the unit volume and 24.4 percent of the revenue take.

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