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Sales Soar in the Third Quarter as DVD Dominates

7 Nov, 2003 By: Judith McCourt

Consumer sales of videos for the 13-week period ended Sept. 30 soared, thanks to the growing household access to DVD players and consumers' healthy appetite for the latest releases.

Sales for the third quarter of 2003 tallied $2.79 billion, up 19 percent from the $2.34 billion that consumers spent in the comparable three-month period last year, according to Video Store Magazine market research.

As consumers favored discs over cassettes, revenue grew. Overall unit volume for the quarter was up 5.4 percent, but the shift in product mix from VHS to DVD bolstered revenue even more. Video Store Magazine market research shows that 81 percent of all unit sales were generated by discs, compared with 62 percent in the same quarter of 2002.

DVD revenue for the quarter accounted for $2.42 billion, or 87 percent of the overall take for July, August and September. By comparison, last year disc revenue was $1.73 billion, or 74 percent of the gross. Third-quarter DVD unit sales grew 37 percent from third-quarter 2002, and revenue posted a 40 percent increase.

VHS sales continued to fall, with just 19 percent of all units sold and 13 percent of revenue generated in the third quarter coming from cassettes. Third-quarter VHS unit sales dropped 47 percent, with revenue off 40 percent from the same quarter in 2002.

August was the strongest month of the quarter, thanks to such megahits as New Line Home Entertainment's The Lord of the Rings: The Two Towers and Buena Vista Home Entertainment's Chicago, released Aug 26 and Aug. 19, respectively. Video sales for the month fell just short of the $1 billion mark ($998.9 million) and were 25 percent higher than sales in August 2002.

September, as summer gave way to fall and kids returned to school, was predictably the weakest month of the period, with sales coming in at $829.3 million, 8 percent higher than in September 2002. With the fourth quarter in progress, which typically accounts for more than one-third of the unit sales, Video Store Magazine predicts that 2003 will be a record year. Sales are projected to be more than $14.2 billion for the 12-month period. The heavy release schedule includes the top five theatrical grossers of 2003. That, coupled with consumers' preference for higher-priced discs, should result in a windfall at the cash register.

October sales will be dominated by Warner Home Video's The Matrix Reloaded, which pulled in $281.5 million on the big screen, making it the No.3 theatrical grosser of 2003 so far this year.

November video debuts include Buena Vista's Finding Nemo, the No.1 theatrical earner of 2003, with $339.2 million at the box office; Universal Studios Home video's Bruce Almighty (No. 4, $242.6 million); and 20th Century Fox Home Entertainment's X2: X-Men United (No. 5, $215 million).

Another Disney offering will bolster December sales. Pirates of the Caribbean: Curse of the Black Pearl (No. 2, $301.8 million) will hit retail shelves Dec. 2 at the height of the holiday buying season.

Through Sept. 30, consumers spent $8.76 billion purchasing videos, up 10 percent from the $7.99 billion spent through the same nine-month period in 2002.

Warner Home Video, which includes New Line, HBO and PBS, was the market-share leader for the quarter, according to Nielsen VideoScan. The supplier grabbed 21.8 percent of overall unit sales, with 83 percent of the units sold coming from DVD. Top performers for the supplier were The Lord of the Rings: The Two Towers and Final Destination 2.

Buena Vista scooped up the No. 2 spot in market share, with 19.7 percent of the overall unit sales for the quarter. Slightly more than three-quarters (78 percent) of all units sold for the studio were discs. Top performers for the quarter included Chicago, The Lizzie McGuire Movie and Bringing Down the House.

Comedies were consumer favorites, with 29 percent of all unit sales coming from chucklers. Also, 88 percent of all comedies purchased were discs.

Children's nontheatrical product crossed the DVD line in the third quarter, with 51 percent of unit sales coming from discs.

The sole VHS laggard is the fitness genre, with 67 percent of its unit sales still coming from cassettes.

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