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DVD a Major Driver in Film Revenue

12 Aug, 2004 By: Jessica Wolf

Last year's growth in spending on the filmed entertainment market — which includes theatrical, video, interactive TV and TV programming — was primarily driven by DVD growth, according to Veronis Suhler Stevenson's “Communication Industry Forecast and Report.”

Total video spending increased by 13.8 percent to reach $33.1 billion last year, with total DVD spending — rental and sellthrough combined — increasing by 45.3 percent, according to the report.

Overall filmed entertainment will grow at a compound annual rate of 8.2 percent to reach $105 billion by 2008, the report projects. DVD spending (sales and rentals) is expected to grow at a compound annual rate of 17.3 percent — more than double that of the filmed entertainment market as a whole — to reach $50.7 billion by 2008.

Overall, the video market is expected to grow at a compound annual rate of 10.8 percent from 2003 to 2008, and DVD spending will “continue to more than offset losses in the VHS market,” according to the report. Sales of both formats will surpass rentals, the report projected.

Meanwhile, even as the overall filmed entertainment spending pie continues to grow over the next five years, the home video market will continue to take an incrementally larger slice of it, the report showed.

In 2003, box office spending accounted for about 14 percent of total filmed entertainment spending, while home video made up 46.7 percent of the pie, the rest split amongst interactive TV formats and TV programming. Over the next five years, the report predicts, box office spending will remain at about 13 percent, while home video's share of the overall filmed entertainment market should be nearly 53 percent by 2008.

Box office revenue in 2003 was up slightly (0.7 percent) from 2002, according to the report, which stated: “The box office produced another record year of blockbuster films, with 26 movies eclipsing $100 million in revenue vs. 22 the previous year. But there was a significant dropoff in attendance of nonblockbuster films as consumers waited for many to come out on home video.”

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