The robust DVD market is driving healthy growth in the home video industry this year, helping compensate for declines in VHS rentals, according to new figures from trade groups.
Total manufacturer-to-dealer sales of VCRs and DVD players in the first quarter of 2001 were 3% higher than during last year's comparable period, according to a report from the Consumer Electronics Association (CEA), Arlington, Va.
Total video product sales (including video playing devices and camcorders) were up 2% to 13.6 million units.
DVD player sales for the quarter -- at 2.3 million units -- nearly doubled 2000's first-quarter performance, said the CEA, reporting that March sales alone "increased by a phenomenal 193% to 1.2 million units."
"These first-quarter numbers prove that consumers are embracing the digital transition," said CEA President and CEO Gary Shapiro. "We should continue to expect growth in digital product sales as consumers continue to realize the high-quality performance benefits over analog, such as superior audio and video quality, associated with the digital experience."
Meanwhile, more than 16 million DVD players have been sold to U.S. consumers since the format's debut, according to data from the DVD Entertainment Group (DEG), Los Angeles. Based on the current growth rate, projections are for shipments of 17 million units this year.
The DEG also reported that software shipments of DVD movies and music video titles have more than doubled over the same quarter last year, reaching nearly 70 million units, according to data compiled by Ernst & Young LLP, New York, on DEG's behalf. There are more than 9,000 titles now available in the format.
"Now firmly established as a mass-market product, DVD continues to be one of consumers' favorite new electronics products as evidenced by the strong numbers in a comparatively soft quarter," said DEG Chairman Emiel N. Petrone in a news release.
Home video rental revenues also increased, rising by 3.2% from $2.06 billion in 2000's first quarter to $2.12 billion this year, according to the Video Software Dealers Association (VSDA), Encino, Calif.
The group reported that DVD rental revenue "increased a whopping 223%" over the periods, from $91.79 million in 2000 to $296.64 million this year.
"The substantial increase in DVD rental revenues reflected in the first quarter of the year demonstrates the delight and the new discoveries consumers continue to find in this format," said VSDA President Bo Andersen.
VHS rentals declined 7% from quarter to quarter, however, dropping from $1.97 billion in 2000 to $1.83 billion in 2001.
Greg Durkin, research director and video analyst for consultants Alexander & Associates, New York, gave one possible explanation for the decline.
"I think that [specialists] are abandoning VHS prematurely, especially in their buys, because the profits are so much higher on DVD," he told SN. "VHS customers are suffering in their selection."
Still, with DVD rentals more than making up the difference, the market shows encouraging performance.
"Compared to other movie delivery systems available, consumers continue to rank home video top in value, convenience and comfort," said Andersen, "while enjoying the widest selection of filmed entertainment available anywhere."