DVD Spurred Double-Digit Rental Growth in September9 Oct, 2003 By: Melinda Saccone
The appeal of DVD is not limited to the sales counter, as renters proved in September. Rental revenue mirrored the double-digit increases seen at sellthrough so far this year.
Consumer rental spending for the four-week period ended Sept. 28 posted a 30.8 percent increase from the comparable four-week period last year. Strong product in the rental pipeline lured consumers to the rental counter, boosting September tallies to $816.6 million.
Rental price increases coupled with strong demand for late August and September product boosted monthly revenue compared with the comparable period last year.
While rental price increases accounted for a solid portion of the revenue boost, strong consumer demand at the rental counter also helped spawn growth.
Video Store Magazine market research shows that the average price of a new-release rental stands at $3.72, up 13.1 percent from an average of $3.29 in September 2002. The jump in rental pricing was even more pronounced with the top 50 rentailer chains, according to Video Store Magazine's midyear survey of the top 50 rentail outlets. The midyear average rental price jumped to $3.84 for a new rental with this group that accounts for more than 60 percent of the rental market.
While spending remained well above last year's comparable tallies, average weekly spending slowed from last month. On average, consumers spent 4.9 percent less at the rental counter in September than they did in August. Consumers spent an average of $204.2 million a week in September, down from $214.8 million weekly in August.
Rentailers brought in plenty of copies of September releases. Collectively, nearly 12 million copies of the September releases debuting on the top 25 rentals chart were shipped into the rental pipeline, up 51 percent from their 2002 counterparts.
More than 70 percent of those September deb units were purchased in the DVD format, according to Video Store Magazine market research estimates. By comparison, DVD shipments of August debutantes accounted for about 60 percent of total shipments. Thus, in one month's time, rentailers have increased their DVD buys by almost 10 percent as they transition away from VHS toward disc.
While rental rate increases helped drive revenue up for the top 25 September rentals, transactions for these top performers also posted increases, despite less box office strength. The box office strength of this year's top 25 rentals was off 6.7 percent from their 2002 counterparts; however, this year's top 25 outperformed their 2002 counterparts by 17.6 percent, collectively generating $462.6 million in rental revenue.
Eleven new releases found a spot on the top 25 rentals chart, accounting for the lion's share of rental revenue. Collectively, these debs accounted for 58 percent ($266.2 million) of the total rental revenue generated by the top 25 September rentals. By comparison, in August, there were also 11 debs on the top 25 rentals chart for the month. Collectively, their earnings accounted for 51 percent of the revenue generated by the top 25. The results indicate DVD copy depth may be driving renters to the hits, pushing out second-choice titles.
Warner Home Video, which distributes New Line and HBO product, and Columbia TriStar Home Entertainment ended in a dead heat in the battle for top rental market share for the month. Both studios grabbed 24 percent of monthly transactions. It was Warner's second turn as rental frontrunner this year and Columbia TriStar's fourth.