CONSUMER SPENDING ON DVDS RISES 8%: DEG

DAN ALAIMO

LOS ANGELES - Consumers spent $22.8 billion renting and buying DVDs in 2005, DEG: The Digital Entertainment Group here reported recently.

Consumer spending for DVDs was up about 8%, according to DEG. DVD retail sales grew 5% to $16.3 billion in 2005, with unit sales up 10%. Consumers also spent $6.5 billion renting DVDs, an increase of 14% over last year.

However, when VHS sales and rentals were included, the dollars spent on home video was relatively flat from the previous year. Consumers spent $24.3 billion renting and buying DVD and VHS combined in 2005, down from $24.5 billion in 2004.

Many supermarkets are doing better selling lower-cost titles than the big hits, sources told SN.

"The studios are doing more and more with catalog DVD and we continue to do more and more too because of the lower price points," said Bob Gettner, video buyer/coordinator, B&R Stores, Lincoln, Neb. "Those continue to grow."

It's hard to compete with mass merchants and electronics stores that sell the hit titles for less than what many other retailers can buy them for, said Craig Hill, video specialist, Harp's Food Stores, Springdale, Ark. "The gross just isn't there," he said.

However, movies priced under $10, with some as low as $7.99, are doing well at Harp's. "People are buying some of the older stuff if they can get a bargain price on it," Hill said.

Supermarkets "selectively support" new releases out of concern for shrink, said Leslie Baker, vice president, sales, grocery and drug, Ingram Entertainment, La Vergne, Tenn. This makes product priced below $10 more attractive to the retailers as it is less likely to be stolen, she said. "Lower shrink concerns and higher margins is a win-win for grocery retailers," she said.

DEG also reported that suppliers shipped more than 1.6 billion software units in 2005, a 9% increase over 2004. The total number of units shipped since the launch of the DVD format in 1997 was 5.6 billion, DEG said, attributing these statistics to Kaplan, Swicker and Simha, Encino, Calif.

Citing numbers from the Consumer Electronics Association, Arlington, Va., DEG also said that the number of DVD households is now 82 million, adjusted for the 50% of households that have more than one player.

Top 10 SUPERMARKET DVD SELL-THROUGH TITLES

As of January 29, 2006

RANK: Title (# of Weeks Out),; Studio, Retail Price; Last Week

1) N; Flightplan; Buena Vista $29.99

2) N; The Fog; Sony $28.95

3) 1; Wedding Crashers (3); New Line $28.98

4) 3; The 40-Year-Old Virgin (6); Universal $29.98

5) 2; Red Eye (2); DreamWorks $29.99

6) 4; Underclassman (1); Buena Vista $29.99

7) 5; The Man (1); New Line $27.95

8) 6; Mr. & Mrs. Smith(8); Fox $29.99

9) 7; The Brothers Grimm (5); Buena Vista $29.99

10) 9; March of The Penguins (8); Warner $28.98

N = New

This chart, tailored for the supermarket video market, is based on information taken from more than 1,000 supermarket rental locations serviced by Ingram Entertainment, La Vergne, Tennn.