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Slow July Rentals Add to Year-to-Date Segment Slump

5 Aug, 2004 By: Melinda Saccone

Previously viewed title (PVT) sales helped to offset the precipitous decline in transactional rentals as July produced one of the weakest showings at the rental counter so far this year.

Consumer spending on transactional rentals in July hit its lowest level since March, as product offerings for the month were slim compared to last year. Consumers spent $568.1 million at the rental counter for the month, down 28 percent from the comparable four-week period in 2003.

The box office strength of new releases in July were off more than 40 percent from their 2003 counterparts. The July 2004 release slate generated $319.6 million in theaters prior to their video debut — more than $200 million shy of their 2003 counterparts. Not a single release surpassed the $100 million mark in theaters, compared to two last year.

While transactional rentals continue to erode, PVT sales continue to grow at warp speed, helping to offset the double-digit declines in rentals.

Video Store Magazine Market Research estimates that consumer spending on PVT product generated an additional $120.8 million for rentailers in July, but not enough to pull transactional rentals above combined July 2003 tallies. If PVT revenue is added to the rental mix, combined spending increases to $688.9 million for the month, off 23.5 percent from the $900.6 million consumers spent renting and buying PVT videos in July 2003.

The top 10 PVT sellers collectively accounted for 43.3 percent of monthly PVT revenue. Columbia TriStar Home Entertainment had the top two selling PVT releases in July — 50 First Dates and Secret Window — which together generated more than $15 million.

While monthly PVT sales helped dampen the gap in consumer spending at the rental counter in July, the segment has had an even bigger impact on annual spending.

At the end of July, year-to-date transactional rental spending was off 15.4 percent from the comparable 30-week period last year, registering in at $4.7 billion.

However, if PVT sales are included, that gap shrinks to just 5.3 percent, with consumers spending $5.85 billion through the end of July compared to $6.18 billion during the comparable 30-week period in 2003.

Meanwhile, it was a close race at the rental counter for market-share dominance with three studios vying for the win. Collectively, Buena Vista Home Entertainment, Warner Home Video and Columbia TriStar releases accounted for slightly more than 60 percent of rental transactions for the month.

Buena Vista took top honors, with the studio's releases generating 21.7 percent of July transactions. The studio had two of the top five releases for the month. Leading for the studio was Miramax Home Entertainment's Oscar-winning (best supporting actress) Cold Mountain (No. 3, $33.9 million). Combined rentals from the unrated and rated versions of BV/Dimension's Badder Santa/Bad Santa placed at No. 5, earning $33.3 million in its first month of release.

Warner and Columbia TriStar were neck-and-neck for second place. Warner won the No. 2 spot with a 20 percent market share for the month, while Columbia was a close third with 19.3 percent of July transactions.

Rounding out the top five for the month were MGM (No. 4, 12.1 percent of transactions) and 20th Century Fox Home Entertainment (No. 5, 6.8 percent).

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