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November Rentals Fall In Sellthrough Onslaught

11 Dec, 2003 By: Melinda Saccone

November rental spending fell below expectations despite a stellar product lineup, however year-to-date spending remains above 2002 tallies.

Consumers spent $671 million at the rental counter for the five-week period ended Nov. 30, down 17.3 percent from the comparable five-week period last year.

Average weekly consumer spending for the month hit its lowest levels so far this year. Weekly consumer spending averaged $134.3 million per week during the five-week period ended Nov. 30, down from $162.4 million during the comparable period last year.

Competition from the sales counter has begun to encroach on rental demand. As overall video sales escalate, rental revenue has begun to slow. Historically, the fourth quarter has been one of the strongest rental seasons of the year. This year, performance at the rental counter is likely to fall short of expectations.

Many industry pundits expected great things from the fourth-quarter lineup. Fourteen new titles slated for release in the quarter billed more than $100 million in theaters. By the end of November, nearly three-quarters of these box office blockbusters had been released. That leaves a big uphill battle for the five remaining releases in December, which have collectively earned $789.9 million in theaters.

December heavy hitters include Buena Vista Home Entertainment's Pirates of the Caribbean and Freaky Friday, Columbia TriStar Home Entertainment's Bad Boys II and S.W.A.T., and Universal Studios Home Video's Seabiscuit.

With DVD household penetration at 50 million, climbing sales competition could have a marked effect on rental demand for these frontrunners.

Monthly tallies so far this quarter have fallen short of comparable spending in 2002, though total rental spending for the year remains in the black.

So far this year, consumers have spent $8.75 billion at the rental counter, up 9.1 percent from spending in the comparable 48-week period in 2002. Disc rentals are up 73 percent from last year, while cassette rentals are off 25.1 percent.

In the race for rental market share dominance, Warner Home Video scored for the third time this year, with the studio's releases accounting for 20.9 percent of all November transactions.

Leading for Warner was Terminator 3: Rise of the Machines, which was also the top rental for the month. Video Store Magazine market research estimates nearly 2 million units of T3 were shipped into the rental pipeline, making it rentailers' second-highest buy for the month next to 20th Century Fox Home Entertainment's X2: X-Men United, with an estimated 2.1 million units in the rental channel.

Columbia TriStar Home Entertainment placed second in the market share sweepstakes for the month, with the studios' releases accounting for 18.6 percent of November rentals.

Rounding out the top five for the month were Fox (13.9 percent), Buena Vista (13 percent) and Universal (11 percent).

The year is shaping up to be a close race in the quest for rental market share dominance. Warner and Columbia TriStar will duke it out in the last month of the year. Currently, less than 1 percentage point separates the two.

The race for third place is also tight, with less than a percentage point separating Buena Vista and Universal. Both studios have big releases debuting in December.

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