$21 Billion 2002 for Home Video

8 Jan, 2003 By: Hive News

The home video industry enjoyed a record-breaking year with combined rental and sellthrough revenues topping out at $20.6 billion for 2002, according to the Video Software Dealers Association (VSDA).

The American consumer's embrace of DVD technology was behind the growth for the year.

"Based upon research conducted through mid-December 2002, we derived a preliminary estimate that the video sellthrough market will reach $12.4 billion by the end of the year," said Tom Adams of Adams Media Research.

Revenue from DVD sales will account for 65 percent, or $8 billion, of these consumer sales dollars – a 51 percent increase from the $5.3 billion in sellthrough revenue DVD enjoyed in 2001.

DVD rentals also set new records, with revenues reaching an all-time high of $2.9 billion, reflecting a 106 percent or $1.5 billion increase from $1.4 billion in 2001.

According to VSDA's VidTrac program, which measures national consumer video rental spending based on actual rental transactions, the 2002 DVD rental revenue figure represents 891.4 million turns vs. 444.8 million turns in 2001.

The DVD format share of the total rental market increased from 17 percent in 2001 to 35 percent in 2002. "Seeing growth of DVD rentals of this magnitude in 2002 shows that more and more consumers are embracing DVD for both their rental and sell-through purchases," noted Andersen.

Consumer rental spending on VHS for 2002 totaled $5.3 billion, down 25 percent from $7.02 billion in 2001. Turns reached 2 billion but overall were down by 23.1 percent from 2.5 billion in 2001. Accordingly, the VHS format market share shrank 18 percentage points – from 83 percent of rental revenues in 2001 to 65 percent for the year 2002. Yet despite reports of its demise, VHS remained the dominant rental format.

Overall, consumers spent a total of $8.2 billion renting 2.9 billion VHS cassettes and DVDs in 2002. Revenues were down a slight 3 percent ($250 million) from the $8.4 billion in 2001, with turns down 144 million, or 4.8 percent, from 2.9 billion in 2001.

"The home video market continues to grow, remaining the most preferred way to view movies," said VSDA president Bo Andersen. "With an average rental price of $3.20 for DVD and $2.70 for VHS, and DVDs priced for sale between $10 and $25, home video remains one of the most affordable forms of entertainment available. DVD players now sell for under $100 and are in 35 percent of television homes and 95 percent of television homes have a VHS player, making this form of entertainment available to everyone. The advantages of low cost, availability and diversity of product, ease of use, and no monthly fee or high-speed Internet service required will keep the home video industry healthy for the foreseeable future."