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TOP 100: DVD Boosts Video Markets Abroad

30 Apr, 2004 By: Jessica Wolf

Piracy continues to be the prevailing issue for the global home video market. While some countries have made advances on the piracy front in recent years, sales of illegal packaged video goods — mostly pirated DVDs and video compact discs (VCD) — are still taking a sizeable chunk out of copyright holders' and video retailers' revenues, to the tune of about $3 billion per year, according to the Motion Picture Association.

In fact, rampant piracy led to the shutdown of Blockbuster's last two franchise locations in Ecuador last month. A Blockbuster executive in the country told the Reuters news agency that revenue had fallen nearly 60 percent over the past two years, due largely to the fact that people could buy the newest hits on the street corner for $1 or sometimes $2 less than Blockbuster's $3.50 (U.S.) rental rate.

The United Kingdom's video market is thriving and is the biggest of the European nations, with DVD spending there doubling that of France's second-largest market. U.K. consumers spent 3 billion euros ($3.6 million U.S.) on DVD sales and rentals last year, according to media research company Screen Digest.

Rental dealers in the region have become accustomed over the past two years to video suppliers' tiered pricing schemes that require a rentailer to pay a higher cost for product than sellthrough retailers.

But recently, with no announcement or warning, according to rentailers and distributors in the region, Universal Studios Home Video began marking re-releases and reduplications of catalog titles “for retail only” and will not necessarily offer a “for rental” product option for those titles. At least one U.K. wholesale distributor has filed a complaint with the region's Office of Fair Trading, calling it a restrictive practice that will inhibit retailers from replenishing their library of rental titles should they need new copies of catalog releases.

While Canada's video market — when it comes to consumer behavior and adoption — has always closely mirrored the United States, there's more of a balanced competitive field among the top retailers in that country.

Store expansion continued for most of the Top 10 retailers, with Movie Gallery adding 35 stores for the largest gain.

The video market is robust in Canada, thanks to DVD, said Rogers Video president Chuck van der Lee. DVD hardware adoption has grown to more than 60 percent across the country, he said.

“Our largest percentage of business comes from DVD rental,” he said.

Game rentals have been thriving, and previously viewed sales of DVD have been a boon to Rogers and the rental industry as a whole, van der Lee said, making them competitive against mass merchant pricing.

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