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HIVE EXCLUSIVE RESEARCH: Third-Quarter and September Rentals Up Sharply

12 Oct, 2001 By: Melinda Saccone

Despite a soft economy, the rental industry showed resilience as combined third-quarter spending held strong. Consumer spending in thethree-month period ended Sept. 30 totaled $3 billion, up 13.7% from the previous year and 8.1% above the three-year average of $2.78 billion.

Historically, the third quarter has been very strong, averaging a 26.2% increase over the previous quarter, which includes the summerslate. This year, third-quarter rental spending totals are up 41.6% over the $856.5 million spent in the second quarter of thisyear.

DVD continues to soar, with third-quarter rental spending registering $438.9 million — a 119.8% increase from the $199.7 million spent onrenting DVDs in the third quarter of 2000. Consumer spending on VHS rentals tallied $2.57 billion for the quarter, up 5% from the$2.4 billion spent in 2000. Overall rental spending escalated in September to an impressive $1.02 billion as consumer demand increased due, in part, to a strong slate of new releases and consumers looking for alternatives to the nonstop TVnews coverage of the Sept. 11 terrorist attacks and their aftermath.

Total spending for the month increased 26.4% from the $810million spent in 2000. Part of that increase owes to extremely low spending on video rentals during the same period last year as theOlympics, which ran from Sept. 15 to Oct. 1, diverted viewers. Looking at the past three years, September spending on video rentals hasaveraged $938.5 million, which puts this year's total a healthy 9.1% above the average.

Consumer spending on DVD rentals continued to increase in September, totaling $186.2 million or 18.2% of total monthly spending, up from 9% in the comparable period last year. VHS rental spendingregistered $837.4 million for the month — up 13.6% from thecomparable period last year.

The top 25 rentals for September of this year had a cumulative box-office take of $1.12 billion — a 42% increase over their 2000counterparts, which garnered $789.7 million at the box office. That power translated into more rentals and more available copies for rent asretailers purchased on average 1.7% more copies of this year's top 25 rentals. Demand for this year's lot increased as well, with eachcopy renting an average of 12.4 times, outpacing last year's lot by a margin of 1.3 to 1.

Leading the pack in September was MGM Home Entertainment's Hannibal, the studio's only release to find a spot on the top 25 rental chart for the month. The thriller grossed $165.1 million in theaters before its rentaldebut. Hannibal outpaced its next closest competitor, Warner HomeVideo's Exit Wounds, in September rentals by a margin of 1.3 to 1.

Warner, which includes New Line Home Entertainment, continued dominating the rental market sweeps in both monthly and quarterly market shares. The studio cornered 28% of all rental transactions in Septemberand 20.9% of third-quarter rentals. The studio had seven of the top 25 spots on the top rental chart for September — more than any other studio.

Columbia TriStar Home Entertainment placed second in the monthly and quarterly market share sweepstakes, with respective market shares of 22.5% and 20.6%. Buena Vista placed third in both monthly and quarterly market share, with 13% and 18.7% of rentals.

Comedies remain the genre of choice, accounting for a landslide 34.5% of all September rental transactions and 39% of third-quarter transactions. DreamWorks Home Entertainment's The Mexican was the top-renting comedy for the month.

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