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VSDA Show: 2003 Video Spending Projected To Increase by Double Digits

29 Jul, 2003 By: Judith M., Melinda S.

For the first time in seven years, video spending for 2003 is expected to post a double-digit increase from the previous year.

Video Store Magazine market research estimates that revenue from home video sales and rentals will end the year at $23.3 billion, up 11 percent from the $21 billion spent in 2002.

DVD Drives Growth
DVD is the deciding growth factor in consumer home entertainment spending, dominating at both the sales and rental counters.

The DVD Entertainment Group expects by the end of 2003, DVD players will be in 55 million households. That figure jumps to more than 100 million when other DVD playback devices are factored into the mix.

DVD sales alone by year's end are projected to beat the $12.1 billion that consumers spent on discs and videocassettes in 2002. Fourth-quarter product streams support consumers spending $12.2 billion on discs this year, up 40.2 percent from the $8.7 billion spent in 2002, Video Store Magazine market research estimates. Disc sales should account for an estimated 88 percent of all consumer video sales in 2003.

Half-Billion-Dollar Bump
Video Store Magazine market research estimates there is potential for an additional $0.5 billion in revenue on the sellthrough side, which could drive the full-year tally to $23.8 billion.

The potential upside kick will be driven by fourth-quarter wild cards. There's plenty of heavy hitters already prepped for the fourth quarter pipeline. And other summer-smashes are wild cards waiting in the wings for street date (see accompanying list).

Although cassette sales traditionally find a sweet spot with consumers over the holiday buying season, Video Store Magazine market research pegs total VHS spending at $1.8 billion by year's end, a 47 percent decline from 2002.

Rental Rebound
Meanwhile, video rentals are on the rebound. By year's end Video Store Magazine market research expects consumers to spend $9.4 billion at the rental counter, up 5.6 percent from last year.

Mid-year tallies posted a 6.5 percent increase in rental spending from the comparable six-month period in 2002. Softer product in the third quarter combined with increased competition from the sales counter will put the pressure on rentals.

Video Store Magazine market research estimates DVD rentals will register $5.1 billion by year's end. Cassette rentals will continue to weaken and are expected to decline to $4.3 billion in 2003.

Fourth-Quarter Wild Cards:
X2: X-Men United (Fox)
Pirates of the Carribbean: The Curse of the Black Pearl (BV/Disney)
The Hulk (Universal)
Terminator 3: Rise of the Machines (Warner)
Legally Blonde 2: Red, White and Blonde (MGM)
Lara Croft: Tomb Raider: Cradle of Life (Paramount)
Bad Boys 2 (Columbia TriStar)

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