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TV DVD a Global Growth Business

4 Oct, 2006 By: Helen Davis Jayalath

Against a background of plateauing consumer spending on DVD, the TV DVD sector continues to shine as a beacon of hope for video distributors. Growth in the United States may be slowing, but in Western Europe, spending on the genre rose 16% in 2005, against a decline in overall video spending. In volume terms, the European TV DVD sector grew 33% last year, according to an analysis by Screen Digest.

With both the TV and video industries now looking forward to high-definition, it is appropriate that TV titles already are beginning to figure into the Blu-ray Disc and HD DVD lineups.

But it's worth remembering that programs previously released on DVD from distributors' existing libraries will not be suitable for high-def unless they are available on film for remastering. Thus, even in the age of HD, standard DVD may continue to be the format of choice for legacy TV product.

Of course, the larger capacity of HD discs would theoretically enable whole TV series to be held on a single disc. However, the use of multiple-disc sets for TV DVD products provides, for many consumers, a clear rationale for the higher prices charged for TV DVDs. Once consumers are unable to see any physical differences between TV and non-TV product, it is unlikely that retailers will be able to maintain the premium price on TV products, potentially reducing overall spending on the genre. Continuing to release standard-definition TV product on DVD rather than the HD alternatives may ultimately help maintain the value of this segment.

Paramount Home Entertainment's decision to market two episodes of “Star Trek” on a single DVD disc in 1999 marked the birth of an almost entirely new genre in the United States. But in parts of Europe, the concept already was a familiar one, due to a TV VHS market that was almost as old as the video business itself. In fact, Warner UK released the first “Friends” titles in the United Kingdom back in 1997 — long before their initial U.S. release — achieving sales of more than 20 million units that year alone.

But it is in the past few years that TV DVD has begun to fully realize its true potential. For studios and TV companies, the trend is particularly exciting because they already have created, and paid for, this content. It is the equivalent of striking oil in one's own back yard.

Today, the U.S. TV DVD business is worth around $3 billion annually, according to Adams Media Research, up from just $160 million in 2000.

In Western Europe, spending on TV DVD last year came in at an estimated $1.6 billion. In the United Kingdom, where the genre is most mature, TV DVD has consistently accounted for about one in every four consumer pounds spent on buying DVDs in recent years. This is in part a reflection of the proliferation of higher-priced, multiple-disc boxed sets. In 2005, the average price of a TV DVD title was more than twice that of its non-TV DVD counterpart. As a result, TV DVD sales have always accounted for a far larger proportion of consumer spending than their unit sales might suggest.

In addition to generating growth in a slowing market, the TV DVD boom also is affecting the makeup of the DVD-consuming public. New demographic groups, which had proved more resistant to DVD's improved sound and picture quality, are being attracted by other features of the format that TV DVD exploits. In particular, DVD's chaptering capability has made episodic TV content accessible in a way that was impossible on VHS. In many countries, women and older buyers are buying TV DVDs in greater proportions than they have ever bought feature films.

Although tastes obviously vary by market, Screen Digest analysis shows that a small number of highly lucrative franchises, generally (though not exclusively) made in the United States, make up the bulk of the TV DVD top 10 in most mature markets. The United Kingdom, and to a slightly lesser extent France, are the exceptions to the rule, where local TV-fed distributors have led the way in marketing TV DVD. This has resulted in sales of local product regularly outperforming the offerings of the majors: in the United Kingdom, all but one of 2005's top 10 TV DVD releases were British-made (the exception being the first-season set of “Lost.”).

Regional tastes vary, of course. Consumers in both France and the United Kingdom have long preferred comedy to all other offerings — a trend that has been repeated in the United States. In Germany and Italy, though, sci-fi and other cult titles top the bestseller lists. Minor genres also can be profitable for the specialist and, despite the dominance of the major studios, independents with a nose for niche markets can not only survive but prosper in the TV DVD market.

Helen Davis Jayalath is senior analyst, video, for Screen Digest.

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