Home Media Magazine - February 24, 2008 - (Page S8) blu skies » Continued from page 7 movies on DVD — down 9% since the peak in 2004. market, if you’re not going to provide people with a way of “Some of the biggest declines are being seen in mid-tier consuming that is cheap enough and easy enough, they will feature films, those doing $30 million to $40 million at the be more open to alternatives, such as downloading, either box office,” he says. legally through services such as iTunes, or illegally.” DVD No Longer on Target? DVD Market: Peaked or Ripe for Rebound? Some analysts are still bullish on DVD, such as NPD VP and senior industry analyst Russ Crupnick, who believes DVD could be revived just as the supposedly mature video game market jumped from $13.5 billion in 2006 to $18.5 billion in 2007. “If you have the DVD equivalent of the Wii and PS3 and great new content equivalent to the new ‘Halo’ franchise games, if you do it right — good content, good devices — and you make the consumer excited, I don’t even think there is a nail in the coffin for DVD,” Crupnick says. “It’s not just about introducing new platforms. The video game market expanded their user base significantly — there are now more women and older people playing video games. And their sequels did sensationally.” But aside from Crupnick’s optimism, most believe the DVD market has topped out for good. In a recent report, Jim Bottoms of Understanding & Solutions says the DVD market has peaked and will decline in most world markets over the next five to 10 years. Even more unsettling, Tom Adams at Adams Media Research says the DVD image is already a bit of smoke and mirrors because the sales of more expensive TV programs on DVD is masking a precipitous decline in the purchase of One of the nation’s largest retailers and the second-biggest seller of DVDs, Target Stores, has been saying for some time now that what they call their “entertainment category” — inclusive of home entertainment hardware and software, music and books — is a declining category. “We expect it to continue to decline,” Target Corp. representative John Hulbert says. Although Target does not break out revenue for specific product categories, Hulbert says that the electronics and entertainment categories are part of a larger group with toys and sporting goods that collectively represent 23% of the chain’s business. Wal-Mart has often been criticized for using new-release DVDs as a loss leader. Whatever profit that stores such as Wal-Mart and Target realize on DVD, the fact is that it is a significant driver of traffic to their stores, and surely a notable percentage of overall revenue. Adams says that the impact on retailers has been far less than on feature-film suppliers. “Consumer spending is down only 4% from the 2004 peak of $16.6 billion,” he says. “Sales continue to be strongest on the frontline titles that retailers use to drive traffic.” Continued on page 10 » BLU-RAY VS. HD DVD: HIGH-DEF MARKET SHARE 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Blu-ray HD DVD 1/6/08 1/13/08 1/20/08 1/27/08 2/3/08 2/10/08 Source: Nielsen VideoScan 8 IT’S BLU February 2008
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