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TV DVD Growth Outpaces Industry's

5 Oct, 2006 By: Jessica Wolf

CENTURY CITY, Calif. — TV DVD is still on a sales growth curve that outpaces the market as a whole, even as its eager sibling, digital downloads, goes through its first growth spurt, presenters and panelists said at the fourth annual TV DVD Conference.

The conference, held Oct. 5 here at the Hyatt Regency Century Plaza, was produced by Home Media Retailing in cooperation with The Hollywood Reporter, DEG: The Digital Entertainment Group and the Entertainment Merchants Association.

So far this year, DVD sales are up 4%, but TV DVD sales are up 20%, according to research from The NPD Group presented by analyst Russ Crupnick.

According to NPD's consumer polling, 35% of TV DVD buyers say they plan to purchase more of the product this year compared to last, and 55% said they plan to buy the same amount.

Internationally, five regions make up 75% of TV DVD sales outside the United States — the United Kingdom, Japan, Germany, France and Australia, said Amy Heller of Media Control GfK International.

There are plenty of digital options for collecting TV programming these days, from services such as iTunes, Amazon, Google, MySpace, Yahoo, AOL and Movielink. TV DVD buyers, Crupnick said, are twice as likely to also buy programming digitally.

Digital downloads now make up less than 1% of consumers' total TV consumption, but that's a 255% increase from last year, Crupnick said. Digital downloads should make up 10% to 12% of the TV acquisition market by next year.

Unsurprisingly, Apple's iTunes is leading the charge with 67% market share in the paid TV-download group, Crupnick said.

For the most part, no one sees digital downloads as cannibalizing the packaged TV DVD business.

“We view it as a convenience that will grow the overall pie,” said Bill Clark, EVP and GM of Starz Home Entertainment (which includes Anchor Bay Entertainment).

Digital also can be used as a way to offer samples of product and drive customers to packaged DVD, he said.

“We do see it as incremental right now,” said Jim Wuthrich, SVP of digital distribution for Warner Bros. Home Entertainment Group. “What we were surprised at was how well full-season downloads seem to be doing.”

Consumer habits are still primarily in the living room, said Sean Besser, VP of business development for download site Movielink.

The breakthrough will come when consumers can use mobile devices to both acquire content and port it to another device, such as a TV set, said Sean Carey, EVP of digital distribution and product acquisition for Sony Pictures Home Entertainment. Those devices are already here and just getting better, he said.

Pricing, broadband speeds and DVD-burning restrictions keep things at baby steps right now, panelists agreed.

In the meantime, social sites that feature user-generated content such as Revver.com and BitTorrent.com serve as strong marketing tools as well as delivery devices for all kinds of content.

But the future will be a combination of user-generated content (UGC) that gets fans buzzing with options to purchase copyrighted content, said Brian Tapitch, VP of business development for BitTorrent.com.

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