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THE TOP 100: Foreign Exchange

2 May, 2002 By: Thomas A., Jessica W.

This week, Hive4Media will bring you Video Store Magazine's Exclusive Annual Research bonanza, the Top 100. Two parts of this unique research series will appear every day this week in this space. Today we continue the series with a look at the Top 10 etailers and the Top 10 international video retailers. To view supporting charts and tables, see your copy of Video Store Magazine.

The international home video market continued to increase in importance to the Hollywood movie studios in 2001, as retailers overseas enjoyed explosive growth with DVD.

“For the past five years, it's been a fairly significant percentage of our global revenue,” said David Bishop, president and COO of MGM Home Entertainment. “Household penetration is lagging behind the U.S. market by about a year, but we are experiencing rapid growth within the DVD market in all the key international territories.”

DVD last year accounted for 39 percent of the $13.64 billion consumers spent overseas on video purchases and rentals, studio sources estimate. DVD sales accounted for 53 percent of total video purchases of $7.44 billion and nearly one-quarter of the rental-spending total of $6.2 billion, studio sources say.

“DVD continues to be the real success story, with sales being heralded by the studios as the second coming,” noted veteran British retailer Michael Senker, who near the end of 2001 sold all but one of his 100 Vid Biz rental stores to competitor Apollo Home Entertainment.

DVD rental, meanwhile, proved fertile ground for experimentation, as studios dallied with pricing and rental windows in key territories like Great Britain, Germany and Australia. Warner Home Video introduced a controversial dual-pricing system for DVDs in Australia in which rental discs were priced twice as high as those earmarked for sellthrough. The Australian Video Retailers Association promptly filed suit, accusing Warner of breaching federal trade and copyright law, and a federal judge ruled in its favor, nixing the Warner plan.

On the retailer front, Blockbuster Inc. continued to dominate the international scene, with more than 2,200 stores in 27 foreign countries. Blockbuster chief John Antioco told Video Store Magazine that Blockbuster's international division was a bright spot, with “many of our international markets experiencing double-digit sales increases.”

While Blockbuster may have the most stores, Japan's CCC generated the most dollars of any international video operation. The rental chain benefits from Japan's high population density and households with little space for large video collections.

Piracy remained “a big concern” in such markets as Taiwan and some Latin-American countries, Bishop said. The Motion Picture Association in September 2001 reported a sharp uptick in pirated DVD seizures, with bootleg discs nabbed primarily in Asia but also in the Middle East, Africa, Europe and North America.

Regional coding and release windows were other hot topics. Many U.S. suppliers stopped putting French subtitles on DVDs because so many American market discs end up in France, where videos typically come out much later. At October's DVD Update 2001, participants called for more sensible release patterns, including simultaneous theatrical and video releases worldwide.

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