Rentals Fall as Sellthrough Gains Ground in Q418 Dec, 2003 By: Melinda Saccone
Consumer spending at the sales counter continues to escalate as many consumers have found product in the marketplace prime for holiday gift giving, putting additional pressure on rentals, which have fallen short of 2002 tallies for the past seven weeks.
Unit sales of the top 50 sellers continue to post solid gains from comparable 2002 tallies, according to Nielsen VideoScan data. Cumulative fourth-quarter sales through Dec. 6 of the top 50 releases are up a solid 15 percent from the comparable period last year.
DVD unit sales for the 10-week period ended Dec. 6 are 42 percent ahead of comparable 2002 tallies, while VHS unit sales are off 51 percent.
Rental spending for the week ended Dec. 14 continued to post losses, with consumers spending $132.4 million, down 4.9 percent from the previous week and down 38 percent from the comparable period last year.
While the fourth-quarter product lineup appeared to be golden for rentailers, it didn't translate into the record revenue predicted at the rental counter. Competition from the sales counter continued to impact rentals, leaving what is normally one of the strongest quarters of the year lagging.
Historically, Q4 rental spending has accounted for nearly 30 percent of annual rental revenue. This year, however, rental performance in the last three months of 2003 will fall well below that average.
Video Store Magazine market research estimates that rental revenue generated between October and December of this year will post double-digit losses from spending during the comparable 13-week period in 2002.
While rentals lag, sales of previously viewed titles (PVT) continue to bring in hefty profits for many rentailers. Video Store Magazine market research estimates that PVT sales are poised to bring in an additional $400 million in the last three months of the year.