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Report: Strong Growth Ahead

7 Oct, 2005 By: Jessica Wolf

Home video sellthrough will grow at a compound annual rate of 10.1 percent, to $26.9 billion, in 2009, according to a new report from Price Waterhouse Coopers.

The research company unveiled results from its Outlook for Content and Communications: 2005-2009 at a presentation in Los Angeles this week.

Mike Dunn, president of 20th Century Fox Home Entertainment, said even this year will be up 6 percent, or about $1 billion, from 2004. That's a figure a lot of industries would love to have, he said. People still are buying on average 14 discs a year, he said.

“We just put out a new DVD of ‘The Family Guy,’ he said. “We sold 1 million units of a cartoon to adult males who are supposed to be pirating our product.”

On that front, Dunn said, the studios have taken their most aggressive and proactive stance yet on pirates with the formation of MovieLabs, which includes all the major studios. “Everyone is tossing a few million dollars in, and we're hiring cryptologists and technology experts,” he said. Typically, the studios have relied on computer and electronics manufacturers to provide copy-protection solutions, he said.

Patti Hutton, CFO for Universal, and Dunn said they saw problems with Paramount's announcement that it would throw product support to Blu-ray Disc as well as HD DVD. “It's too expensive to be in two formats,” Hutton said.

“If we want the format to be successful, we need to offer one format,” Dunn added.

Fox sided with Blu-ray and is sticking with it, citing the better copy-protection system it offers and the Trojan horse advantage is has in the Blu-ray-enabled PlayStation 3, set for release next year.

“We think in the next couple of months, all companies will line up with that format,” Dunn said.

The Price Waterhouse report projected U.S. filmed entertainment revenue, which includes theatrical box office and video revenue, will reach $48 billion in 2009, at a 6.6 percent compound annual growth rate, even in the face of a maturing DVD market and piracy. As the traditional rental market slows, the online market will take off, the report projects.

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