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DVD Propels First-Quarter Rentals to a Record High

23 Apr, 2002 By: Melinda Saccone

U.S. consumer spending on VHS and DVD rentals hit a record high in the first quarter of the year, thanks to a strong slate of releases coupled with consumers' honeymoon with DVD.

Consumers spent $2.56 billion at the rental counter in the first three months of the year — up 6.7 percent from the $2.4 billion spent in the comparable period in 2001.

VHS rentals declined 7.4 percent from the first quarter of 2001. Despite the downtick, cassette rentals still accounted for more than two-thirds of all rentals in the first quarter of the year. Consumers spent $1.96 billion renting the VHS format, compared to $2.12 billion in the first quarter of 2001.

DVD rentals skyrocketed following record fourth-quarter sales of the hardware, more than offsetting the deficit in VHS transactions. Disc rentals totalled $598.3 million for the first quarter — up 113.6 percent from DVD rentals in the same period last year.

A first-quarter study of 500 U.S. households conducted for Video Store Magazine shows DVD penetration (based on consoles) reached almost one-third of U.S. households by quarter's end. With more consumers embracing the technology, retailers big and small have responded by beefing up their DVD inventories to meet demand.

Rentailers like Blockbuster and Hollywood Video adjusted their rental inventories. On average for the quarter, ‘A' titles in DVD format comprised 31 percent of Big Blue's buy. Hollywood was not far behind, with 28 percent of their ‘A' titles stocked in the DVD format. By comparison, independent rentailers said that about one-third of their ‘A' title buys are now DVD.

Universal Studios Home Video, which also distributes DreamWorks Home Entertainment's product, took top market share for the quarter. Historically, the studio has fared well in the first quarter, taking the lead for the third consecutive year. Universal captured 26.8 percent of all rental transactions in the first 13 weeks of the year, with seven titles finding a spot among the top 25 renters. Universal releases also took the top two spots.

Universal's actioner The Fast and the Furious was consumers' rental of choice for the first quarter. A surprise hit in theaters, earning $144.5 million, the Vin Diesel starrer also made waves in the rental arena, posting the biggest opening week debut of the first quarter. The Fast and the Furious, which streeted in the first week of the year, earned $18.65 million in its first five days of release.

Universal's American Pie 2 was the No. 2 rental for the quarter. The sequel to the coming-of–age comedy American Pie earned $16.69 million at the rental counter in its first five days of release, making it the No. 2 debut for the quarter.

Warner Home Video came in a distant second in first-quarter rental market share, with 14.7 percent of transactions and four releases among the top 25 rentals. Hearts in Atlantis (No. 10), a February release, was the studio's only title in the top 10 for the quarter.

20th Century Fox Home Entertainment missed second billing by a narrow margin, with 14.6 percent of all first-quarter rental transactions. The studio had three releases among the top 25 rentals, with Don't Say a Word leading Fox's charge at No. 3.

Rounding out the top five suppliers for the quarter were Buena Vista Home Entertainment (No.4 at 13.5 percent) and Paramount Home Entertainment (No. 5 at 10.9 percent).

Comedies remain at the top of consumers' lists, accounting for 31.4 percent of all first-quarter transactions. Actioners placed second, with 21.3 percent of all first- quarter transactions. Rounding out the top five were dramas (No. 3, at 17 percent), thrillers (No. 4, at 8.9 percent) and horror (No. 5, at 6.1 percent).

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