Good News for Rentailers14 Jul, 2005 By: Judith McCourt
No, it's not a typo: There is good news in rental stores. After a long down period, consumer spending on video rentals is up for the third consecutive week, and the slump that began in February is beginning to level out.
Through July 11, consumers spent an estimated $4.41 billion on rentals, virtually flat with the $4.45 billion they had spent in the comparable period last year.
Memorial Day marked a turning point for rental. For the seven-week period since Memorial Day, weekly rental revenue averaged $165 million, a gain of nearly 10 percent from the average $150.8 million over the comparable period in 2004.
Box office spending may have been lifted with the better-than-expected theatrical opening of Fantastic Four, but overall box office spending for the year still is down 7.7 percent from last year, according to Nielsen EDI.
The strong showing of video rentals suggests consumers are forgoing a trip to the movies this summer and instead spending time and money on home video.
The top renter for the week ended July 10 was Twentieth Century Fox Home Entertainment's Hide and Seek, which grossed $51 million in theaters. During its first week at rental, Hide and Seek earned more than $14 million, 28 percent of its theatrical gross and more than some movies with higher box office earnings that streeted in the spring.
The first batch of releases to kick off summer debuted May 24, in time for the Memorial Day weekend. Warner Home Video's The Aviator debuted at No. 1 and has since pulled in $36.3 million in rental revenue.
Sony Pictures Home Entertainment's Boogeyman hit the following week. The horror film earned more than $25 million in rental revenue its first five weeks in stores, about half its theatrical gross of $46.4 million.
June 14 came another Sony title, the comedy Hitch. The $177.6 million comedy snagged the top spot on the rental charts, setting the stage for a rental rally. Since its arrival at retail, Hitch has hitched nearly $40.4 million in rental stores.
The real fire ignited with releases that came out June 21, a wave of films that fared marginally well in theaters, leaving them with rental potential. Paramount Home Entertainment's Coach Carter ($67.3 million), Warner's Miss Congeniality 2: Armed and Fabulous ($48.5 million) and Buena Vista Home Entertainment's Hostage ($34.6 million), from Miramax Films, hit stores. Rental revenue shot up nearly 25 percent from the previous week and 20 percent from the comparable week in 2004.
The uptick continued for the next two weeks, with rental spending in each week up from the comparable week of 2004. Buena Vista's The Pacifier and Lions Gate Home Entertainment's Diary of a Mad Black Woman scored over the July 4th holiday, while Fox's Hide and Seek was in heavy demand the following week.
Of the $4.41 billion spent so far this year on rentals, 84.1 percent ($3.71 billion) comes from DVD, up 17 percent from last year. VHS rentals continue to wane, with the year-to-date total off 45 percent from last year.