NEW YORK -- Despite challenges from new technologies, the VHS videocassette is alive, well and still growing in sales, according to a speaker at the International Recording Media Association's Marketing Summit held here last month.
"We believe that as long as key industry participants continue to identify and then effectively manage the various challenges that are perched around the proverbial corner, the videocassette format will continue as the leading packaged media format for a number of years to come," said B. Quentin Lilly, chief operating officer of Technicolor Packaged Media, Camarillo, Calif., a leading tape duplicator.
With IRMA projecting VHS sales to reach 995 million units in 1998, up 2.5% from 1997's 971 million units, Lilly said, "I would caution against any sentiment that 1998 represents the peak year for VHS market demand." He cited research from Understanding & Solutions that predicted that VHS unit volume will continue to grow for five years, peaking in 2002 at almost 1.2 billion units.
"We believe the industry should continue to see single-digit growth rates over the next several years, albeit at declining rates, reaching a plateau of about 1.1 billion units after the turn of the century," he said.
"Titanic," which represented some 25 million two-tape packages shipped into the U.S. market in 1998, was responsible for much of the increase. But a healthy rise in the rental market, spurred by an industrywide increase in copy depth, was also a significant factor, he said.
"The success of such programs is evidenced by stimulated consumer spending on rental, which in 1998 is expected to advance 6% to $9.5 billion from approximately $9 billion in 1997," Lilly said.
"This trend, in our opinion, is significant in light of the fact that critics have often pointed to weakness in the rental market as one possible indicator of a downturn in the overall home-video industry," he said.
Another important trend was the growth in direct-to-video feature sell-through titles. Lilly noted that in 1994 there were only two direct-to-video releases: "Return of Jafar" and "Land Before Time 2." "In 1998, a total of approximately 29 such titles were released," he said.
Technicolor believes in the future of optical disc-based media like DVD and recently acquired Nimbus, Ruckersville, Va., to take part in that business, he said.