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VSDA: DVD Gains on VHS in Rental Market Share

27 Mar, 2002 By: Kurt Indvik

DVD has made a 12 percent market share gain over VHS in video rental revenues through the first quarter of this year, the Video Software Dealers Association (VSDA) reports.

Consumers have spent $542 million so far this year renting DVDs (172 million rentals) and $1.32 billion renting VHS cassettes (500 million rentals), according to the VSDA's VidTrac rental point-of-sale program.

That works out to a 28.9 percent share of video rental market for DVD, while VHS holds 71.1 percent. VidTrac's 2001 year-end results showed a cumulative share of video rental revenues for DVD of about 17 percent to VHS' 83 percent. DVD does a little better in the rental of "new releases," holding about 32 percent share of rental revenues to VHS' 68 percent.

Though DVD has been making significant strides in rental market share and already is neck-and-neck with VHS in marketshare of home video sellthrough revenues, VHS' viability as a format is still strong and its demise is years off, said Bo Andersen, president of the VSDA in a statement accompanying these figures.

"The VHS format will decline naturally with the growth of DVD, but it is far too soon to write its obituary," Andersen said. And the pace of adoption of DVD is more rapid than the loss of VHS business, fueling an overall growth in the market. "The industry is gaining three DVD rentals for each lost VHS rental," said Andersen.

The VSDA cited figures from research company Centris that show 15 million VCR players were sold in 2002, a 15 percent replacement factor for a near-saturation penetration. The still-active VCR household indicates a continued reliance on the machine for recording (certainly until DVD-R becomes affordable) and playback of VHS libraries collected over the years. It's estimated 48 million households have more than one VCR.

"…the facts do not currently indicate an either/or proposition with respect to the growth of the DVD format as meaning the necessary and imminent elimination of VHS," said Brad Hackley, VSDA's director of research.

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