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Warner Tops Biz For 2005

30 Dec, 2005 By: Thomas K. Arnold

The sky may not have fallen on the fast-maturing DVD business in 2005. But the double-digit revenue growth studio home entertainment divisions enjoyed almost since the format's 1997 launch did come to a grinding halt.

Final numbers on consumer spending aren't yet available, but the consensus among studio executives, analysts and other observers is that it may be hard to top the record $24.5 billion consumers spent on home video purchases and rentals in 2004.

While final year-end revenue numbers haven't yet been tallied, two things that have been decided are the annual market-share derby among studios and the year's top DVD sellers.

Analyzing Nielsen VideoScan data, Home Media Retailing's market research department gives the market share crown for 2005 to Warner Home Video, with a 19.8 percent share.

Meanwhile, The Incredibles was the year's top selling release, generating an estimated 17.38 million in unit sales for Buena Vista Home Entertainment.

Deep Discounts Could Drive Higher Unit Sales

Year-end results may yet be buoyed somewhat by a late-year surge that saw exceptional sales for several titles released late in the fourth quarter, including Universal Studios Home Entertainment's The 40-Year-Old Virgin, which sold 3.7 million copies in the first six days after its Dec. 13 release.

“We're now at almost 5 million units,” said Craig Kornblau, president of Universal Studios Home Entertainment. “This tremendous surge at the end of the year shows consumers embraced DVD as much as they have in prior years. When it comes down to giving gifts for the holidays, DVDs still are one of the premier choices.”

Indeed, most observers attribute the flattening of the market to deep discounting at retail rather than consumer disinterest — although the down box office certainly didn't help matters. Over the holidays, Wal-Mart stores sold top theatrical titles like Shark Tale and Shrek 2 for as little as $3.99. On Black Friday — the day after Thanksgiving and the traditional start of the holiday shopping season — Circuit City had a selection of hits, including The Incredibles, the year's No. 1 DVD seller, priced at just $8.98.

For the year, “unit sales will almost certainly be up,” Kornblau said. But for now, the jury's still out on accurate revenue totals. In November, the most recent month for which numbers are available, Nielsen VideoScan point-of-sale data showed a 13.6 percent uptick in unit shipments but an overall video revenue gain of just 6.3 percent from November 2004.

Benjamin Feingold, president of Sony Pictures Home Entertainment, said a studio analysis of VideoScan data pegs unit sales for the year to be up 5.9 percent from 2004. The revenue picture, however, remains unclear, pending the receipt of final sales data through Dec. 31.

Feingold fingers “catalog pricing” as the big revenue-buster, but maintains there's little studios can do about it, at this point. “It's difficult to arrest price declines on an existing format,” he said. “Historically, that's not something that has been a successful strategy.”

That's why it's so important to bow a new format, Feingold maintains.

“Projections I made for Sony [corporate] four years ago were that the market would top out in 2005, and that's why I was so anxious for a new format to be introduced,” he said.

The Market Share Derby

Warner Home Video had several huge DVD titles in 2005 to drive it to the leadership position, including Batman Begins, The Polar Express and Charlie and the Chocolate Factory. But the studio owes its victory more to the sheer mass of product it pumped into the market, including well-received special editions of classics like The Wizard of Oz and franchise properties in the TV DVD and children's video arena.

Buena Vista Home Entertainment came in second, with an estimated market share at 14.8 percent. The studio's video coffers were fueled by The Incredibles, the year's top-selling DVD, and strong performances by special DVD editions of Bambi and Cinderella.

In the race for third place, it was a neck-in-neck finish between Universal Studios Home Entertainment and 20th Century Fox Home Entertainment, each with 13.5 percent.

Universal's figure includes its distributed DreamWorks Home Entertainment titles, which included such top sellers as Shark Tale and Madagascar, although the studio on its own scored big with Meet the Fockers and Ray in the first half of the year and The 40-Year-Old Virgin in December. Broken out, Universal's market share for the year is pegged at 9.2 percent, while DreamWorks checks in at 4.3 percent.

Fox fielded a slate of big sellers throughout the year, including Star Wars: Episode III — Revenge of the Sith, Mr. & Mrs. Smith and Fantastic Four, all fourth-quarter titles that maintained momentum throughout the holiday selling season.

Sony Pictures Home Entertainment finished in fifth place for the year with a 13.1 percent market share. The studio's marquee title in 2005 was Hitch; its video profile was further heightened in July when it took over distribution of MGM titles.

Rounding out the six major studios was Paramount Home Entertainment, in sixth place with a 9.9 percent market share. Paramount's big title was The Longest Yard, although much of its market share came from its TV DVD output, which included the year's top TV DVD seller, Chappelle's Show: Season 2 Uncensored, with unit sales estimated at 2.84 million by Home Media Retailing.

Mini-major Lionsgate finished the year with a 4.1 percent market share, while Sony Music/Sony Wonder came in at 1 percent.

Buena Vista's The Incredibles was the top-selling DVD in 2005, with total sales to date estimated at 17.38 million units by Home Media Retailing.

Second place went to Fox's Star Wars: Episode III — Revenge of the Sith, with year-to-date sales pegged at 10.36 million units, followed by DreamWorks' Madagascar and Shark Tale, tied for third place with sales of 10 million units each.Warner's The Polar Express came in at No. 5, with estimated sales of 8.13 million units, followed by Universal's Meet the Fockers (No. 6, 7.21 million units), Buena Vista's National Treasure (No. 7, 7.2 million units), Buena Vista's platinum edition of Cinderella (No. 8, 6.56 million units), Universal's Ray (No. 9, 6.53 million units) and Warner's Batman Begins (No. 10, 6.15 million units).

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