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EXCLUSIVE RESEARCH: DVD Sales Offset Cassette Declines

25 Jan, 2002 By: Judith M., Melinda S.

It was a year of DVD at the sales counter in 2001.

While consumers spent $10.78 billion dollars buying cassettes and DVDs, on par with spending in the previous year, DVD spending surged at the sales counter enough to offset the decline in VHS sales that are feeling the squeeze as more and more consumers opt for discs over cassettes.

Combined consumer spending on buying and renting videos pushed the market to $20.8 billion, a 2.8 percent overall gain, according to Video Store Magazine market research estimates.

Buena Vista Home Entertainment, thanks to its stronghold in the VHS marketplace, captured 20.1 percent of the total sellthrough market dollars to finish as the No.1 sellthrough supplier in 2001. When all was tallied at the rental and sellthrough counters, the race was too close to call. Buena Vista finished in a dead heat with Warner Home Video, the No.1 finisher in the rental sweeps. Each supplier scooped up $3.9 billion or 18.6 percent of the dollars spent by consumers renting and buying home entertainment products in 2001.

DreamWorks Home Entertainment's Shrek was the runaway best seller, according to VideoScan data, capturing the top spot on the VHS, DVD and combined sellers charts in 2001.

U.S. consumers spent a record $5.15 billion on DVDs, according to Video Store Magazine market research estimates, up 51 percent from the $3.4 billion that was spent over the same period in 2000. Although household penetration of DVD was pegged at year's end around 25 percent by the Consumer Electronics Association, DVD spending accounted for 47.8 percent of the dollars spent at the sales counter as adoptees of the format started and added to their DVD collections.

Action/adventure, comedies and dramas accounted for almost two thirds of all DVD unit sales last year, underscoring the demographics of the first waves of DVD adopters, who are young and more likely to be male. Combined sales from family and children's nontheatrical product registered 11.7 percent of units sold.

Meanwhile VHS sales slipped from $7.38 billion to $5.63 billion, a 23.7 percent decline according Video Store Magazine market research. VHS sales made up 52.2 percent of the sales dollars last year, compared to 68.5 percent of the $10.78 billion spent in 2000.

Children's nontheatrical and family product was the mainstay of VHS sales. Children's nontheatrical titles accounted for 20.7 percent of unit sales on VHS last year compared to just 2.1 percent on the DVD side. Family product weighed in with 20.7 percent of VHS unit sales compared to 9.6 percent of the DVD total.

Although Buena Vista sold fewer units than Warner, its pricing structure tipped the scales to hand it the first place finish in sellthrough market share. Buena Vista titles, which include the Disney, Miramax, Touchstone, and Dimension labels, grabbed 25 percent of the dollars spent on cassettes for a No. 1 finish in that sellthrough market. Slower to embrace DVD, Buena Vista finished third in DVD market share for 2001, with 14.9 percent of the DVD dollar take. On the VHS side, Buena Vista owned six of the top 10 VHS best sellers of 2001. Dinosaur (No.3), released in January 2001, was the best performer for the Mouse. The studio's Pearl Harbor, a late fourth quarter release, was the No. 2 DVD seller for the year.

Warner, No. 2 in overall sellthrough market share, continued unchallenged in its position as DVD leader, grabbing 20.3 percent of the DVD dollars spent. New Line Home Entertainment's Rush Hour 2 was the supplier's top performing DVD, placing No. 6 on the DVD seller list and No. 9 overall. On the VHS sellthrough side, Warner finished in the No.3 spot with 16.7 percent of the pie. Cats & Dogs, released under the Warner label in October, fared best with a No. 14 finish on the VHS list.

Universal Studios Home Video, which includes DreamWorks Home Entertainment, was a strong third place finisher with 18.1 percent of the sellthrough market share. Dreamwork's Shrek and Universal's Dr. Seuss' How the Grinch Stole Christmas were the No. 1 and No. 2 finishers, respectively on both the overall sellers and VHS charts. The combined strength of the two green men gave Universal the No. 2 berth in VHS sales with 20 percent of total dollars. On the DVD side, the supplier also finished in the No. 2 slot with 15.9 percent of sales. Universal was a third place finisher in the overall sweeps (both sellthrough and rental), claiming 17.5 percent, or $3.6 billion, of the $20.8 billion dollar home entertainment market take in 2001.

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