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Previously Viewed Title Take Still Blunting Falloff in Rental Revenue

17 Mar, 2005 By: Melinda Saccone

February was a month of ups and downs on the rentail scene, as transactional rental revenue dropped, while previously viewed title (PVT) revenue jumped.

More than 70 percent of rentailers reported that their monthly rental revenue failed to post gains from 2004.

Consumer spending at the rental counter for the four-week period ended Feb. 27 registered $616.8 million, down 6.7 percent from the comparable period in 2004.

Small rentailers were the hardest hit. Forty percent of rentailers with inventories between 5,000 and 7,500 units posted double-digit rental revenue losses for the month (16.1 percent) from the comparable period in 2004.

Large rentailers (those with more than 10,000 rental units) felt the least pain. One-third of the largest rentailers said their rental revenue actually increased in the four-week period, according to the survey.

A heavy new-release slate of hits with high ownership mounted stiff competition from the sales counter in February.

The box office strength of the February release slate was up nearly 40 percent from the 2004 lineup for the month. This, however, did not translate into rental dollars.

Home Media Research's 2005 survey of Top 100 rentailers shows that the decline in first-week rental revenue is a growing concern, and February title debut numbers bear that out. The top five rental revenue generators for the month were all February debuts. However, first-week revenue for the top 10 rental debuts was off by more than 40 percent from that of the 2004 counterparts.

Even as the first-week rental take is dropping, the initial week of release is more important than ever. On average, debut-week rental revenue accounts for more than one-fourth of a title's overall rental revenue generated in the first three months of release, up from 15 percent just five years ago.

This shelf-life erosion is a primary concern for rentailers, forcing rentailers to tap alternate revenue streams, according to the 2005 Top 100 survey. One such alternative — PVT sales — is a boon. Consumers spent $170 million purchasing previously viewed discs in February, a 47 percent increase from PVT sales in February 2004, according to Home Media Research estimates.

Sony Pictures Home Entertainment continued its reign at the rental counter. For the second consecutive month, the studio's releases generated more than $100 million in monthly rental revenue. In February, Sony releases accounted for 17.9 percent of all rental transactions. Leading for Sony was the $104 million box office blockbuster The Grudge. The thriller was consumers' top pick at the rental counter, earning $25.5 million in its first 4 weeks of release. Competition from the sales counter sent many copies of The Grudge. to the selloff bin at a record pace. The Grudge. was the top PVT seller for the month as well, generating an additional $8.7 million for rentailers, according to Home Media Research estimates.

Warner Home Video, which distributes New Line and HBO product, came in a close second, with 17 percent of February rental transactions.

Rounding out the top five for the month were Universal (13.7 percent), Fox (13 percent) and Buena Vista (12.3 percent).

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