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TOP 100: DVD Revenue Generators

15 Apr, 2003 By: Kurt Indvik

DVD continued to set milestones in 2002, securing its indisputable leadership position in sellthrough and marching toward a 50-50 split with VHS for rental dollars by year's end.

Retailers that stepped up their commitment as home penetration of DVD continued to rise maximized their take of the growing DVD pie and grew their business, even as VHS continued to decline.

In sellthrough, where DVD has shined since its inception six years ago, domestic sales of DVD in 2002 jumped 69 percent from the previous year, to $8.7 billion, and grabbed about 72 percent of the total $12.1 billion consumers spent buying video, according to Video Store Magazine market research. No doubt it was DVD that was responsible for the sellthrough market growing 12 percent in 2002, from the $10.8 billion consumers spent on DVD and VHS in 2001.

Half of the top 10 retailers in 2002 enjoyed huge increases in DVD. Wal-Mart more than doubled its 2001 business in DVD sales, boosting its disc revenue by about 145 percent. Target, Blockbuster and Sam's Club all enjoyed triple-digit gains as well, while Costco's sales in DVD increased about 62 percent.

Many retailers scaled back their footprint in VHS for more DVD. Studios saw their average shipments for DVD rise above 65 percent of total units, with some titles topping 70 percent and higher.

Mass merchants in 2002 became super-aggressive on DVD pricing of marquee titles, treating them as loss leaders to draw consumers into their stores. Specialty video retailers fought back by getting aggressive on previously viewed sales, buying deeper in DVD so there could be more copies available for sales soon after rental. And studios with deep catalogs dug into their vaults and began firing out mid- to low-priced DVDs that mass merchants gladly took on to feed a hungry market looking to buy.

Those hungry consumers bought more than 25 million DVD players in 2002, a 50 percent increase from 2001, according to numbers from the Consumer Electronics Association. That raised the number of U.S homes with a DVD player to 40 million. There were 95 million total DVD-capable machines (including PCs and game consoles) by the end of 2002.

DVD household penetration could reach 50 percent by the end of 2003.

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To read about the Top Video Specialty Retailers, click here.

To read about the Top Music and Electronics Retailers, click here.

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