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October Sales Highest This Year Since January

26 Nov, 2003 By: Judith McCourt

Consumer spending on home video products in October hit the $1.25 billion mark, according to Video Store Magazine market research, as consumers gobbled up the first of the fourth-quarter hits. October sales volume is the second-highest monthly tally so far this year, surpassed only by January, when sales registered $1.26 billion thanks to post-holiday buying.

With the biggest hits yet to be reflected in the tallies, 2003 continues to shape up as a record-setting year. Consumer sellthrough spending at the end of October was $10.01 billion, 12 percent more than the $8.92 billion spent during the same period last year. DVD sales account for $8.54 billion, or 85 percent of all dollars spent purchasing videos year-to-date.

Overall unit volume for the month was up 16 percent from the comparable month last year, but that translated into a whopping 34 percent increase in dollars spent in October because of the changing composition of product purchased. In October, 87 percent of all units sold were in the DVD format, according to Nielsen VideoScan. This compares with 63 percent in the same month a year earlier. Video Store Magazine market research projects this translates into 90 percent of the revenue take for the month, compared with 74 percent a year earlier.

Spending on discs hit a high point for the year in October. DVD sales soared to $1.13 billion, up from $691 million in the same month last year. January 2003 sales also surpassed the $1 billion point, but fell just shy of October's total. DVD dollar sales are running 36 percent ahead of last year.

While DVD spending soared, cassette spending plummeted. For the month of October, consumers spent just $122.8 million on cassettes, less than half of the $247.4 million spent in October 2002. This year through October, consumers have spent 44 percent less on cassettes than they did in the same 10-month period of 2002.

Heading into 2004, month-over-month dollar growth will slow, as the migration from VHS to DVD (which sells at a higher price) is all but complete. The product mix by supplier underscores the dominance of DVD in the revenue equation.

Lions Gate Home Entertainment's unit sales mix for October was 95 percent DVD, which translates to a revenue base from DVD rapidly approaching the 100 percent mark. Universal (which includes DreamWorks), Fox and Warner unit sales all hovered around the 90 percent DVD mark. Buena Vista Home Entertainment and Paramount Home Entertainment, both of which release more children's product, are still on the migration curve at 82 percent and 86 percent DVD, respectively. Artisan's sales in October highlight the kidvid effect. The supplier's sales for the month were 23 percent VHS, the most heavily skewed to cassette of any supplier, as Barbie of Swan Lake cassette sales influenced the tally.

Warner, which includes New Line, HBO and PBS titles, took top honors for October, with 22.5 percent of the unit volume, according to Nielsen VideoScan. Buena Vista finished in the No. 2 spot, with 16.4 percent of the units sold in October. The race should heat up, as Buena Vista's biggest releases of the year -- Finding Nemo and Pirates of the Caribbean -- have yet to run their courses.

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