DVD, games sales may rise on holiday pullback

Electronics sales may drop despite digital-TV demand, survey says

By Danny King -- Video Business, 10/16/2008

OCT. 16 | Sales of DVDs and videogames are less likely to drop because of consumer spending cutbacks during the holiday season than higher-priced items such as clothes and electronics, NPD Group reported.

Movies trailed only apparel and toys as the most likely item Americans will purchase as gifts, while videogames are the sixth most likely item, NPD said, citing last month's online poll of 2,030 people. In NPD's survey last year, neither movies nor games were among the top six items people planned to buy as gifts.

The rise in popularity for movies and games could be their lower pricing, compared to other categories, as people cut their holiday spending amid the U.S. economic downturn. More than one in four surveyed said they'd spend less this holiday season, up from 18% last year, while the percentage of those who planned to spend more was unchanged at 11%, NPD Group said.

Although electronics, which includes DVD players and home-theater systems, fell to the fourth most popular gift item this year from the second most popular a year ago, TV sales might rise as consumers prepare for the U.S. switchover to all-digital broadcasts next February, NPD said.

The potential drop in electronics is consistent with a National Retail Federation report, which said September sales at electronics and appliance stores dropped 2.1% from a year earlier, compared to a 1.4% increase for all retail sales.

Throughout the first six months of this year, spending on DVD rentals and purchases was little changed from last year at about $10 billion, according to data compiled by Video Business and Rentrak. Third-quarter statistics on DVD revenue will be released later this week.

Meanwhile, videogame hardware and software sales through the end of August surged 32% from a year earlier to $10.6 billion, with software alone jumping 43%, NPD said last month.