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EXCLUSIVE RESEARCH: Buying Habits Change With March of DVD

5 Sep, 2002 By: Judith McCourt

Consumers shelled out $10.78 billion purchasing videos in 2001 and will likely spend close to $12 billion this year, as DVD fuels the demand for home entertainment software.

Video Store Magazine market research estimates that annual DVD spending will hit the $8 billion mark in 2002, while spending on cassettes will decline to less than $4 million, as DVD becomes the sellthrough format of choice. In 1998, total DVD software spending registered just $400,000, but surged to $5.15 billion in 2001.

An exclusive in-depth survey of more than 900 U.S. households conducted for Video Store Magazine found DVD household penetration passed the one-third mark in the second quarter of 2002. In fact, 27 percent of all households said they had purchased a DVD in the last year.

DVD owners love to collect videos. DVD households are buying both DVDs and cassettes more frequently and in greater quantity than their VHS-only counterparts. In the last year, DVD households, on average, said they bought 16.6 discs and 9.9 cassettes. This compares to an average of 7.6 cassettes purchased by VHS-only households.

DVD households' buy frequency also tops that of VHS-only households. Forty-four percent of DVD households bought at least one disc a month, and 24 percent more said they bought a disc at least every couple of months. Also, 33 percent said they still bought at least one cassette a month, and another 24 percent said they made a VHS purchase every couple of months. By comparison, 22 percent of VHS-only households said they bought at least one tape a month, and 17 percent said they bought a tape every couple of months.

The longer that consumers have owned a DVD player, the bigger their DVD collection. Early adopters, those who have owned a player for two or more years, tout the largest collections, with an average size of 51.7 discs. Households that have owned a player for one to two years have 28.8 discs, while those that have had players less than 12 months have 11.6 DVDs. The average DVD household pegged their DVD collection at 24.4, with 5.3 of those being for children under the age of 12.

Meanwhile, despite 90 percent household penetration, VHS purchasing is on the decline, and the average size of households' VHS collections is dropping. In the past year, 49 percent of households said they purchased a cassette, compared to 64 percent of households in 1998. All households still buying cassettes, on average, say they bought 8.3 in the last 12 months, compared to 11.5 cassettes in 1998.

Households surveyed said they own 49.9 cassettes, compared to 61.2 in 1998. VHS libraries are more heavily weighted towards content for children under 12 than DVD collections. Respondents said 39 percent of the cassettes were for children under the age of 12, compared to just 22 percent of DVD libraries.

Regardless of format, mass merchants are the No.1 choice for consumers when they buy home entertainment software. About half of all consumers say they most frequently purchase DVDs and videocassettes at merchants such as Target and Wal-Mart. Big box discounters, such as Sam's Club and Costco, are a distant second, with 10 percent of DVD buyers and 8 percent of VHS buyers favoring them.

DVD buyers are more likely to make purchases at either an electronics retailer or over the Internet than VHS consumers. Thirteen percent of DVD consumers said they most often purchase discs from places such as Best Buy and Circuit City, while 4 percent favor the Internet as their primary buying venue, compared to just 2 percent of cassette buyers.

Hit releases, children's titles and family fare are the favorites in both formats. In the past year, DVD and VHS consumers are most likely to have purchased one of these three genres. More than 40 percent of households that buy VHS bought at least one hit release, while 66 percent of DVD households favored the hits. Forty-five percent of VHS purchases went for children's product, while just 24 percent of DVD were for kids. Thirty percent of households bought at least one family title in the past year.

Buyers most often buy videos for themselves. Sixty percent of all DVD purchases are made for the buyer, and 43 percent of cassettes remain in the hands of the purchaser. Children under 12 are also likely recipients of home entertainment software, with 38 percent of cassettes and 19 percent of DVDs going to the kids.

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