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Price Cuts Drive Sales Down in January

23 Feb, 2006 By: Judith McCourt

Price erosion pushed video sales below the January levels of both 2004 and 2005, as market maturation and a soft theatrical market failed to stimulate unit sales growth for the period.

New Line Home Entertainment's Wedding Crashers arrived as the bright spot for January, selling more than 6 million units in its first month of release.

Video sales registered $1.08 billion in January, a steep 9.3% decline from January 2005 and 1.6% less than the same period in 2004. The average weighted price of a DVD, according to Home Media Research projections, floats around $14. A year ago, that figure was slightly more than $15.

Unit sales for the month were flat. Although it was a mixed bag. Discount mass, drug and grocery chains posted healthy increases, while the rest of the channels lagged behind.

Wedding Crashers, released Jan. 3, sold a whopping 6.1 million units in its first month of releases, according to Home Media Research projections.

By comparison, in January 2005, Warner Home Video's Troy sold 3.5 million units.

Performance from the rest of the month's slate failed to follow suit. According to Nielsen VideoScan data, the top 10 DVD sellers for the month sold 9.7% less than last year's top 10 basket. The top 50 sellers weighed in 11.5% lighter than last year.

The video specialty channel — video specialty stores, book stores and music stores — took the biggest hit. DVD unit sales for the channel dropped 11.4% for the month. Specialty sales accounted for 19.7% of all unit sales for January, according to Nielsen VideoScan data.

Also registering a downtick in unit sales, compared to the same period last year, was the mass merchant/Internet category, which made more than 40% of the month's total unit sales. It also includes big-box discounters, CE stores and online stores. The category posted a 4.4% decline over the comparable 2005 period.

The discount mass, drug and grocery channels showed positive gains in January unit sales. Discount mass merchant unit sales accounted for almost 30% of all unit sales, registering a 12.9% gain for the period. Video unit sales in the drug-store channel were up 54%, while unit sales at grocers showed a 6.6% increase.

Action/adventure, the No. 2-selling genre behind comedy in 2005, showed a steep decline, reflecting the lighter theatrical release slate in the genre. Unit sales of action/adventure titles were down 28.5% for the period. In 2005, the genre showed a 9% decline in unit sales.

Family titles fared well. The category posted a 16% gain, mirroring the gains in the discount, mass and grocery channels, thanks to women, who have traditionally bought family and children's titles. Although family fare was up, children's nontheatrical titles took a dive, with unit sales dropping 4.5% for the month, continuing the 6.4% decline the genre saw in 2005.

Warner, which includes New Line and HBO, was the market share leader for the month, grabbing 25.4% of January's overall unit sales, according to Nielsen VideoScan. Sony Pictures finished a distant second, with 13.4% of the take, while 20th Century Fox Home Entertainment took the No. 3 spot with an 11.7% share.

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