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Individual Hits Can't Stem DVD Sales Decline

6 Apr, 2006 By: Thomas K. Arnold

Buena Vista Home Entertainment's The Chronicles of Narnia: The Lion, the Witch and the Wardrobe is the latest in a series of DVD success stories, selling an estimated 4 million DVDs its first day in stores, April 4, industry sources reported Wednesday.

Meanwhile, Universal Studios Home Entertainment reported Brokeback Mountain tallied first-day sales of 1.4 million units, a strong number for a drama.

The sales triumphs come just as preliminary spending estimates for the first quarter indicate a 4.3% decline in consumer spending on video purchases, to $4.1 billion from $4.3 billion in the first quarter of 2005.

Rental spending of $1.98 billion for the quarter is off 4.4% from the first quarter of last year, according to Home Media Retailing market research.

Total consumer spending on DVD and VHS software for the quarter, purchases and rentals, is projected to come in at $6.08 billion, 4,4% less than the $6.36 billion consumers spent in the first quarter of 2005.

The declines come after a flat calendar 2005.

Final sales numbers for March won't be in for another week. Home Media Retailing's market research department indicated a final tally of consumer spending through the end of February puts spending at $2.3 billion, down 13.1% from the $2.65 billion they spent in the first two months of last year.

Poor film quality may be in part to blame for the shortfall. For January and February, the combined box office strength of new theatrical films released on DVD was $1.24 billion, 10.1% less than the theatrical gross of January and February 2005 DVD releases.

The combined box office strength of March 2006 DVD releases, however, was so pronounced — more than $1 billion, up 38.6% from March 2005 — that consumer spending for March is expected to be significantly higher than the $1.6 billion figure reported for March 2005 — although the $1.8 billion projection isn't enough to close the gap and send total spending for the quarter into positive territory, compared to last year.

Statistics for the quarter also show a dramatic slowdown in the number of new DVDs coming to market. The DVD Release Report estimates suppliers released a total of 2,743 unique DVD titles in the first quarter of this year, 14.3% less than the 3,199 DVD titles released in the first quarter of 2005.

It's the first year the new release schedule has tightened since the DVD format was introduced in the spring of 1997.

Still, studio executives remain optimistic, even though much of the buzz in Hollywood is now centered around the fast-evolving download market for movies.

“As home entertainment delivery options continue to evolve, consumer demand for DVDs remains incredibly robust,” said Craig Kornblau, president of Universal Studios Home Entertainment. “The extraordinary successes of ‘King Kong,' ‘Brokeback Mountain,' ‘Harry Potter and the Goblet of Fire' and ‘The Chronicles of Narnia' sets the stage for a solid Easter selling period.”

The top-selling DVD of the first quarter was Warner Home Video's Harry Potter and the Goblet of Fire, which according to studio sources has sold 9.7 million units since its early March release.

New Line Home Entertainment's Wedding Crashers, released in the lucrative early-January slot, came in second with estimated DVD sales of 8.3 million units, followed in third place by 20th Century Fox Home Entertainment's Johnny Cash biopic Walk the Line (6 million units), strategically released Feb. 28 to capitalize on Oscar buzz.

Universal Studios Home Entertainment's King Kong wasn't released until March 28, near the end of the first quarter, but still managed a fourth-place finish with estimated sales of 5.7 million units through March 31. The studio reported that after six days, the film's DVD sales tally had risen to 6.5 million units.

The next four slots on the top 10 all belong to Buena Vista Home Entertainment: Chicken Little at No. 5 with 4.5 million units, Lady and the Tramp at No. 6 with 4 million units, Bambi II at No. 7 with 3.5 million units, and Flightplan at No. 8 with 2.8 million units.

Rounding out the top 10 are Universal's Jarhead at No. 9 with 2.1 million units, and Lionsgate's Saw II at 2 million units.

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