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TV DVD Continues to Come in Clear

21 Apr, 2005 By: Judith McCourt

Sales of TV DVD packages continue to post robust growth. In the first quarter of this year, TV DVD unit sales rose 20 percent from the comparable 13-week period of 2004, according to Nielsen VideoScan data, putting the category on track for another record year.

Home Media Research conservatively forecasts the TV DVD market to generate nearly $3 billion in consumer spending this year, up from $2.3 billion in 2004.

Not surprisingly, given the lucrative nature of the market, the volume of TV DVD releases continues to swell. So far this year, 211 TV DVD releases either have come to market or have been announced — more than 2000's total (157), according to The DVD Release Report. Although the DVD market as a whole is starting to mature, analysts point to continued growth in the TV DVD segment. Merrill Lynch analyst Jessica Reif Cohen forecasts strong growth in this category through 2008.

One reason the TV DVD market is so lucrative is the higher price points, since most TV DVD releases are multidisc sets. In the first quarter of 2005, more than half (53 percent) of the TV DVD releases have been multidisc sets. By comparison, in 2003 and 2004, multidisc sets accounted for 28 percent and 44 percent of total TV DVD releases, respectively. Multidisc TV DVD sets command an average suggested retail price of $46.10, compared to $13.64 for a single disc.

Suppliers also like TV DVD because it doesn't cannibalize core theatrical product sales. Consumers don't have to make a choice between which hit movie to buy; they buy the hit of the week and a boxed set or two of their favorite TV programs as well. TV DVD benefits from a built-in marketing and promotion cycle, since virtually every show either is on the air or lives on in syndication — or in the memory of nostalgic Baby Boomers or younger adults who grew up with shows from the 1970s, 1980s and 1990s, all of which are coming to DVD at a breakneck clip.

Suppliers also are increasingly drafting off broadcast, releasing previous complete-season sets just as the current season either begins or ends. Marketing, meanwhile, is beginning earlier and earlier, often at the peak of the current season's buzz — which helps fuel both DVD sales and TV viewership. Buena Vista Home Entertainment, for example, already has announced it will release the first season of “Desperate Housewives” in September, just in time to tease the second season's debut on the air. Warner Home Video teased The OC: The Complete First Season to network viewers, and 20th Century Fox Home Entertainment positioned its releases of “24” to network viewers by including a preview of the coming season on the DVD.

As TV DVD expands its appeal, mass merchants are continuing to aggressively go after, and gain, market share. In the first quarter of 2005, almost three-fourths of all TV DVD product was sold at mass merchants and other big discount chains. This growth came at the expense of consumer electronics chains and other specialty retailers, with a share of the TV DVD market that dropped from 28 percent to 23 percent from the comparable quarter last year.

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