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Studios Expecting A Great Q4

7 Sep, 2002 By: Thomas K. Arnold

Studio executives are expecting a record-breaking holiday selling season, with projections that overall video software sales, DVD and VHS combined, could be up by as much as 15 percent from the fourth quarter of 2001.

Benjamin Feingold, president of Columbia TriStar Home Entertainment and the Columbia TriStar Home Entertainment Group, said DVD sales throughout the year have been running 90 percent ahead of sales last year.

“I think we'll be up 125 percent to 135 percent as we go into the fourth quarter,” Feingold said. “Last year we had some great DVDs, but this year the titles are stronger. We have not only Spider-Man but also Men in Black II and Star Wars: Episode II and Austin Powers in Goldmember. We're more right in the sweet spot of the DVD purchaser.”

This projected gain in DVD sales will more than offset any losses on the VHS side, Feingold said, predicting overall video sales during the fourth quarter will be up a solid 15 percent from last year.

Judith McCourt, market research director for Video Store Magazine, agrees with Feingold. Based on year-to-year comparisons of VideoScan sales data, she said video suppliers are on track to realize a record $12.4 billion in consumer spending for all of 2002, of which $8.6 billion will come from DVD sales and $3.8 billion will come from VHS sales.

Last year's total was $10.78 billion, the same as the previous year. “It was a transition year, as consumers switched from buying VHS to buying DVD,” McCourt said.

In 2001, consumers spent an estimated $5.15 billion on DVD and $5.63 billion VHS. In 2000, consumers spent an estimated $3.4 billion on DVD and $7.38 billion on VHS.

Record Summer Box Office
Several factors are boosting Hollywood's optimism for the fourth quarter. For one, the studios just posted a record summer at the box office, and video sales tend to follow the trickle-down theory.

In the three-month period between Memorial Day and Labor Day, consumers in North America spent $3.14 billion on movie tickets, up 2.5 percent from last year's record $3.06 billion, according to box office tracking firm Exhibitor Relations Inc.

Indeed, combined box office earnings of the top 10 new theatrical films coming to video during the holiday selling season -- between mid-September and Christmas -- is up 25 percent from last year's slate.

The holiday 2002 video slate is topped by such megahits as Spider-Man ($403.7 billion), The Lord of the Rings: The Fellowship of the Ring ($313.4 billion) and Star Wars: Episode II — Attack of the Clones ($300 million). Last year's top three were Shrek ($267.7 million), Dr. Seuss' How the Grinch Stole Christmas ($260 million) and Rush Hour 2 ($226.1 million).

“We hope Spider-Man will be the biggest DVD of all time,” Feingold said. “Its demographic is ages 8 through 80. Last year, Shrek was the comparable title, but it was a younger demographic.”

Further fueling studio optimism is the fact that going into the holiday selling season, more than 30 percent of U.S. households have DVD players, up from around 20 percent at this same time last year.

DVD owners also buy a lot more movies than VCR owners did in the heyday of VHS -- an average of 15 or 16 titles a year, three times as many as the average video collector bought in the middle 1990s, before DVD, according to Adams Media Research.

And then there's the product flow -- a dramatic bunching of big titles to lure holiday shoppers. Virtually every week between mid-September and Christmas will see at least one major theatrical hit arriving in video stores. Important dates include Nov. 1, when Spider-Man, the biggest movie of the year, hits video; Nov. 12, when both Attack of the Clones and a special extended edition of The Lord of the Rings: The Fellowship of the Ring will arrive in stores; and Nov. 26, when Men in Black II and Ice Age are released on home video.

David Bishop, president and COO of MGM Home Entertainment, said internal projections indicate consumers will buy 189 million DVDs in the fourth quarter of this year, more than twice the 94 million they bought in the fourth quarter of 2001.

“The concept of building your own home theatre is being adopted by consumers across the nation, which is evident not only by the boom in DVD hardware sales but also the high demand for big-screen televisions and enhanced audio systems,” Bishop said.

‘Best Lineup of Titles' Ever
Kelly Sooter, domestic head of home video for DreamWorks Home Entertainment, says the broad appeal of video product coming to market during the holiday selling season will boost sales significantly.

“Every year we say we've never seen a lineup like this before, but I have to say, this is the best lineup of titles, from a consumer's standpoint, I have ever seen since I've been in the business,” she said.

“In years past, you had some family product and some very adult, ‘R'-rated movies. But this year, everything is ‘PG-13,' so it's really a broad base of movies -- very appropriate for families.”

Bob Chapek, president of Buena Vista Home Entertainment, said increasing numbers of families are entering the DVD arena, and families traditionally are very good video customers.

“The fourth quarter of 2002 should be huge for the whole industry, given the large number of hit films being released,” he said. “Families will certainly play a key role this holiday season as they drive DVD category growth with the availability of huge family titles like Lilo & Stitch and Beauty and the Beast.

Buena Vista is officially kicking off the fourth-quarter selling season with one of the biggest animated movies of last year, Monsters, Inc., coming to video Sept. 17. The studio also has Lilo & Stitch (Dec. 3) and a restored version of the 1991 classic Beauty and the Beast (Oct. 8).

Other theatrical highlights for kids include DreamWorks Home Entertainment's acclaimed Spirit: Stallion of Cimarron (Nov. 19) and Warner Home Video's live-action Scooby-Doo (Oct. 11).

On the direct-to-video front, there's Universal Studios Home Video's The Land Before Time IX: Journey to Big Water (Dec. 10) and Artisan Home Entertainment's Barbie as Rapunzel (Oct. 1), starring America's favorite doll in a follow-up to last year's Barbie in The Nutcracker.

Other family and children's fare in the pipeline include Sony Wonder's Elmo's World: Happy Holidays (Sept. 24) and Arthur: It's Only Rock ‘n' Roll (Oct. 1) and Paramount Home Entertainment's Nick Jr. Holiday DVD (Sept. 24), featuring the Rugrats, “Blue's Clues” stars and other popular Nickelodeon characters.

There's lots of product beyond the big hits, as well.

Craig Kornblau, president of Universal Studios Home Video, notes there's a sharp uptick in classics and TV fare. Universal is a primary contributor to both fields, with a “Back to the Future” trilogy coming Dec. 17 and a special edition of E.T.: The Extra-Terrestrial arriving in stores Oct. 22.

Click here for Thomas K. Arnold's related story in USA Today.

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