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UPDATE: Two Groups Report Video Biz North of $20B

9 Jan, 2003 By: Kurt Indvik

Two industry groups came out with figures last week showing the home video business grew by double digits, to more than $20 billion, in 2002.

The Video Software Dealers Association (VSDA) melded its point-of-sale VidTrac rental data with preliminary retail forecasts from Adams Media Research to arrive at a $20.6 billion combined rental and sellthrough business in 2002, a growth of more than 10 percent from last year's $18.7 billion VSDA industry call.

Sellthrough revenue leapt about 20 percent in 2002, to $12.4 billion, according to Adams Media Research figures released by the VSDA. Rental revenue accounted for $8.2 billion of total 2002 dollars, representing a 3 percent decrease from 2003, according to VidTrac.

The DVD Entertainment Group (DEG) announced that, by its calculations, 2002 home video combined revenue came to $20.3 billion, a 21 percent increase over 2001. Video retail sales came to $12.1 billion in 2002, up 44 percent from 2001. DEG used VidTrac data for all its rental figures.

Meanwhile, Video Store Magazine market research reports this week (see page 34) that 2002 rental revenue came in at $8.89 billion, an 11.5 percent drop from 2001 rental revenue. On the sellthrough side, VSM market research pegs spending for the year at $12.1 billion, an increase of 12.2 percent from sales in 2001. Cassette sales in 2002 fell to $3.42 billion from $5.63 billion in 2001. DVD sales leapt from $5.15 billion in 2001 to $8.68 billion in 2002.

DVD Growth Potential Still Great
According to the VSDA, DVD generated 53 percent of the total market revenue in 2002, or $10.9 billion. DVD's $8 billion in 2002 retail sales represented 65 percent of the total home video retail market. Meanwhile, in rental, VidTrac showed DVD had a 35 percent share of the rental market in 2002, for some $2.9 billion in revenue, a leap of 106 percent from 2001.

DEG estimates that DVD generated $11.6 billion in total revenue for 2002, for 57 percent of the total market. DVD drove $8.7 billion in sales in 2002, capturing 72 percent of all sellthrough dollars.

“Obviously, the adoption of DVD technology has reached the level where you are now getting the folks in the mainstream marketplace, and they are buying aggressively and replenishing their libraries with DVD,” said Bob Chapek, president of DEG.

DEG estimates there are more than 40 million U.S. households with DVD players, approaching 40 percent of the market, and that in 2002 each DVD household bought more than 15 DVD titles.

VHS Still Dominant in Rental, But Losing Ground
VHS captured 47 percent of the total home video market in 2002, for $9.7 billion, according to the VSDA. That's a drop of more than 18 percent from 2001.

The VHS format still dominates the rental market, holding 65 percent of the $8.2 billion rental market last year with $5.3 billion in revenue, a drop of more than 25 percent. According to Adams, VHS generated 35 percent of all video sales in 2002, or $4.4 billion, a 10 percent drop.

DEG estimated that VHS accounted for $8.7 billion in total revenue in 2002, for a 43 percent market share. That's a drop of more than 19 percent in revenue from 2001 levels.

The format was responsible for $3.4 billion in sales in 2002, or 28 percent of the total retail business for home video, a drop of about 11 percent from 2001.

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