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Closing the books on '07...almost
January 8, 2008

The start of the New Year always means closing the books on the old, and so far that's been a positive close for the box-office business, and a not-so-positive end for music. The jury is still deliberating on home entertainment, which has neither the price increases enjoyed by theaters or a download business as large as it is in music to provide positive effect.

The 2007 domestic B.O. set a new record at $9.62 billion, representing a 4% gain over previous best-year 2002 and a 5% uptick from 2006. As is common in the B.O. business, however, that was mostly fueled by price increases -- admission, or the number of tickets sold, were up only 1% from 2006 and down from 2002. Of course, home entertainment would be happy to see even a 1% uptick, but that's not going to be the case this year. (More on that in a minute.) We would also be happy to see revenues going up, even if just a result of price increases, but that is not going to happen either, at least until $30 Blu-ray purchases start replacing $16 DVDs.

In the music biz, the growth in downloads grew at a record pace, but not enough to make up for the loss in physical CD sales. Sales of all albums, physical and digital, were down 15% to 501 million units; only 9.5%  (585 million units) when track equivalent albums (10 songs) were added in. Digital tracks meanwhile, rose 45% to 844 million units.

Home entertainment--meaning DVD--meanwhile, is a mature market, flat to slightly declining , without any new format, physical or digital to offset the loss in 2007. The studios are predicting high-def format sales (Blu-ray!) will offset the DVD decline in 2008. If digital downloads were added in, the new two delivery systems would likely but the industry in the black.

For 2007, however, the estimates are starting to gather around a 4% decline in DVD sales (3.6% says DEG, 4.4% according to Tom Adams), with the entire industry off 2% when high-def formats and rentals are figured in.
VB will weigh in with its own take, including top titles and studio market shares, around Jan. 21.

Posted by Marcy Magiera on January 8, 2008 | Comments (0)