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DVD Rentals Bright Spot in the Lagging Rental Market

26 Aug, 2004 By: Judith McCourt


With rental revenue lagging last year's tally, one of the bright spots in the picture is that DVD rentals are still trending upwards.

For the first 34 weeks of 2004, consumers have spent $3.77 billion renting DVDs, a 9.9 percent increase from the $3.43 billion that consumers spent in the comparable period last year. Although the gain fails to offset the precipitous decline in VHS revenue, which is down 49 percent over the same period, Video Store Magazine's 2004 Consumer Home Entertainment Study suggests that renters have not abandoned the market.

In a study of 600 DVD households, 69 percent said they had rented at least one DVD in the past year, and 29 percent of those who rent DVDs said they rent at least once a week. Overall, 40 percent of households surveyed that rent DVDs said they are renting more DVDs than they were last year.

Households that were most likely to have increased their DVD rentals were new hardware owners, households with annual incomes of less than $20,000 and households that had children ages 13-19. Consumers cited the availability of a good selection of titles at the video store as a key driver in the decision.

Two-thirds of new DVD households — those that have owned a player for less than one year — said they are renting more DVDs than they did last year, citing the availability of hardware as the primary reason for the upswing.

As length of DVD ownership increases, households appear to hit rental equilibrium, with 44 percent of households that have owned a player at least one year noting that they are renting DVDs at about the same pace as they were a year ago.

According to Video Store Magazine's latest poll of rentailers, the average cost of a DVD rental comes in at $3.94 compared to more than $15 for purchasing a disc. It follows that households that said their annual income was less than $20,000 find a higher value in the rental proposition. Fifty-eight percent of households with incomes less than $20,000 said they are renting more DVDs than they were 12 months ago.

The teenage factor is another key influence behind a household's increase in rentals. Households with kids ages 13 to 19 were more likely to have increased their DVD rental consumption than all other households, with 46 percent saying they are renting more DVDs than they did last year.

Twenty percent of DVD households said they are renting fewer DVDs than they did last year. The top two reasons cited by consumers for the downturn was that they are buying more (41 percent) and have less time (26 percent).

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