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Video to Remain A Staple

11 Jul, 2006 By: Thomas K. Arnold

A second report now says consumer spending on home entertainment will continue to go largely to packaged media, at least for another 10 years.

The Entertainment Merchants Association's 2006 Annual Report on the Home Entertainment Industry, citing Adams Media Research numbers, projects consumer spending on home video — which last year finished flat with 2004 — will slowly rise again in the coming years, as next-generation formats take hold.

The trade group (formerly the Video Software Dealers Association) pegs consumer spending on home video will come in at $28.89 million in 2010 and $30.3 million in 2015.

Two weeks ago, a report from Understanding & Solutions, presented at the Entertainment Supply Chain Academy 2006 conference in Los Angeles, projected consumer spending on home video to remain essentially flat over the next five years at $25 billion. By then, standard DVD would account for just $15 billion, with high-definition disc sales and rentals generating the balance, the report said.

The EMA report further projects VOD spending to rapidly gain steam over the next decade, accounting for $4.19 billion in 2010 and $9.77 billion in 2015.

Consumer spending at the box office also is expected to grow, to $10.12 billion in 2010 and $11.73 billion in 2015.

Other findings and projections in the EMA report:

  • Video rental isn't dying, despite a steady decline in rental revenue over the past year and a half. A survey by The NPD Group found 75% of consumers who had rented a video saying they will definitely or probably do so again. And projections are that subscription rentals, such as those offered by Netflix, are the wave of the future, with Adams Media Research predicting that by 2008 the online subscription rental business alone will generate $2.15 billion, up from $866 million last year and a projected $1.345 billion this year.

  • More than 80% of U.S. households, or 82 million, now have at least one DVD player, according to ICR Centris. That number goes up to 89 million when portable DVD players and DVD-capable computers and game consoles are factored in. The number of U.S. households with a VCR, meanwhile, has slipped to 94.4 million from 96.6 million in mid-year 2004.

  • Mass merchants dominate the home video retail market, accounting for 42% of all sales, according to Adams Media Research. Consumer electronics stores are a distant second at 14%, followed by online (11%), warehouse clubs (9%) and video specialty stores (7%).

  • MPA member companies lost an estimated $1.31 billion to piracy last year in the United States alone. Internationally, they lost $4.77 billion. The worst offenders: China, where 93% of the potential market is lost to piracy, followed by Russia (81%), Hungary (73%), Poland (66%), Thailand (62%) and Mexico (also 62%).

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