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Flat is fat in 2008
July 18, 2008
In home entertainment, halfway through 2008, the world is flat. And that is a very good performance for a non-essential (believe it or not, movies are not necessary to maintain life) product category when the price of essentials like food, housing and gasoline are skyrocketing.
VB’s midyear research report shows consumer spending on sales and rentals of all home entertainment formats holding steady just above $10 billion. That’s a big improvement over the midyear mark in 2007, when home entertainment spending was down 5%.
Sales of standard DVD do look to be off 2% to 4%, according to various studio estimates, but rental is up and Blu-ray, with about
$200 million in sales in the first half is offsetting the small standard format loss.
Let this be food thought for the critics who expected packaged home entertainment’s decline to accelerate in 2008 (it ended 2007 down 3%) and declared Blu-ray would never establish itself because consumers became enamored of digital delivery services while the two high-def camps were at war.
Just last week Pali Research analyst Rich Greenfield, who in the past has been rather bearish on home entertainment, in a blog post reversed his earlier opinion that consumer spending on DVDs would decline at an accelerating rate this year after seeing their first decline last year. Greenfield raised his full-year DVD spending estimate to flat, with sell-through down 1% and rental up 1% and admits that might be too conservative give the strong slate of summer films headed to stores in the second half.
Greenfield based his reassessment on slightly overly optimistic midyear data from another source, but his conclusion is spot-on: “The DVD industry is not rapidly declining in favor of digital distribution (whose revenues remain completely insignificant to the Hollywood studios).”
Given the state of the U.S. economy, flat will be a good place for the industry to end this year. But the upcoming release slate and the potential for Blu-ray sales of $800 million to $1 billion do foster hope for more.
Posted by Marcy Magiera on July 18, 2008 | Comments (0)
