OCT. 6 | VHS. What a drag. That’s the prevailing sentiment at some studios chafed by statistics that show the overall home entertainment business essentially flat, when, in fact, DVD is still growing by a small amount each year.
Consumer spending on all packaged media formats for the first three quarters is in the neighborhood of $9 billion, and VHS accounts for just $130 million to $140 million of that total, according to studio estimates. At a 55% to 65% decline, however, the older format’s fall off is still steep enough to drag the whole market back.
The conundrum for the studios is this: They’d love to unload the clunky underperformer, but if they stopped manufacturing tapes tomorrow, that could put, say, $10 million to $20 million per studio at risk. There’s no guarantee the consumers still buying those videocassettes—largely catalog consumers paying $6 to $7 apiece for VHS titles—would switch their purchases to DVD. And in the current studio economy, giving up even $10 million is unacceptable, at least until another format (UMD, HD DVD and Blu-ray Disc are each still a fraction of the size of VHS) jumpstarts real growth.
A close look at the detailed market analysis prepared by one studio for our third-quarter research package adds lots more interesting texture to the blanket +/-1%-type growth figures for home entertainment overall.
There is softness in sales of theatrical titles, as stated in our page 1 story. But TV titles and direct-to-video features continue to grow.
Fueled by relatively big-budget live-action entries from virtually all the major studios, direct-to-video sales grew by more than 10% in units and even more in dollars during the first nine months of the year.
TV, meanwhile, continued to grow in the 5% range, pushed by big gains in catalog. Individual top-selling series, like Lost and The Office, continue to sell at or above that of previous seasons, showing that consumers haven’t tuned out the category.
With third-quarter officially closed, the spinning of the even-more-import fourth-quarter numbers has already begun just several days into October.
Studio sources said Fox’s X-Men: The Last Stand and Disney’s The Little Mermaid two-disc special edition teamed to deliver the biggest fourth-quarter kick-off in recent years, selling 2.6 million units and 1.6 million units, respectively, on their Oct. 3 street date. A source at another studio said the two titles actually sold on par with one another, not counting rental units. Yet another studio source projected the two to be even, but at fewer than 1.6 million units each.
This is what was confirmed by retail: No records were set. The two titles did help deliver what was possibly the best Q4 kick-off of the past several years and neither title was available on VHS.
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