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9 Jan, 2002 By: David Ward

Fueled by the tremendous growth in DVD, consumers spent a record $16.8 billion buying and renting movies and other home video content last year, up 21percent over 2000, the DVD Entertainment Group said in its annual press briefing at the Consumer Electronics show in Las Vegas. Leading that growth was $10.8 billion in new release revenue, compared with $6 billion that catalog releases earned last year.

An obviously pleased Warren Lieberfarb, president of Warner Home Video, said home video is now the top entertainment category in the U.S., surpassing the more than $8.1 billion spent on theatrical movies, $6.4 billion spent on video game consoles, $11.2 billion spent on music CDs and even the $16.5 billion Americans spent on books last year.

According to statistics compiled on behalf of the DVD Entertainment Group, consumers purchased 249 million DVDs in 2001, including 117 million new releases. The average number of DVD purchases per household increased to 14.9 last year, up from 13.4 in 2000 and 12.4 in 1999.

Overall DVD software sellthrough revenue increased to $4.6 billion, 2.4 times greater than the $1.9 billion spent in 2000. Last year's number also means DVD sellthough surpassed VHS purchases ($3.8 billion) despite an installed base that's a little more than 25 percent of the total VCR installed base of 96 million households. Total sales of home video products, including VHS, reached $8.4 billion, up from $5.6 billion in 2000.

Lieberfarb said much of the credit for DVD's growth traces back to the studios' decision in 1999 to release new films day-and-date on DVD and VHS. Lieberfarb said 138 million DVD movies and music videos shipped to retail in the fourth quarter of 2001, bringing 2001 total shipments to 364 million, double the 182 million shipped in 2000. The total number of DVDs shipped since the 1997 launch stands at 675 million.

Driven, no doubt, by plunging hardware prices, the installed base for DVD players will continue to grow by double digits in 2002, Lieberfarb added. According to sellthrough numbers the group compiled, 16.7 million DVD players were sold in 2001, driving the total DVD player installed base to 25.1 million.

The number is even more impressive when you include DVD-ROM PCs and DVD-inclusive game systems such as the Sony PlayStation 2 and Microsoft Xbox. Lieberfarb said the total installed base of machines capable of playing DVD movies has reached a staggering 54.3 million.

Based on a study by the National Research Group, which found 44 percent of consumers intend to purchase a DVD player in 2002, the DVD Entertainment Group predicts consumers will buy 20.8 million DVD players this year, up from just 4.1 million purchased in 1999. "It is clear by this data the DVD will be ubiquitous in this country," said Lieberfarb.

In other news from CES, the contest among competing DVD recorders will likely to continue into its second year, despite concerns that compatibility issues may end up confusing and frustrating new consumers. Following on the heels of the Philips announcement of a $999 DVD+RW unit, Pioneer introduced its high end $2000 DVR-7000 that supports DVD-R/RW format, while Panasonic unveiled $999 DVD-RAM/DVD-R player, the DMR-E20.

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