Home Video Industry Hails A $21 Billion Year

DVD Rental Revenues Reach An All-Time High In 2002

9-Jan-03

The home video industry enjoyed a record-breaking year with combined rental and sell-through revenues topping out at $20.6 billion for 2002, according to Bo Andersen, President of the Video Software Dealers Association (VSDA).The strong growth of the video industry was driven by the American consumer's embrace of DVD technology.According to Tom Adams of Adams Media Research, ""Based upon research conducted through mid-December 2002, we derived a preliminary estimate that the video sell-through market will reach $12.4 billion by the end of the year."" 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 sell-through revenue enjoyed by DVD 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--the video industry's most accurate video rental point-of-sale tracking technology 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 rentals 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 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.""For more information about the Video Software Dealers Association (VSDA), visit www.vsda.org.

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