January 8, 2008 / 12:58 PM / 11 years ago

Dent in '07 DVD sales smaller than expected

LOS ANGELES (Hollywood Reporter) - It wasn’t as bad as many feared. That’s the official verdict on 2007 as final figures show consumers spent $23.7 billion renting and buying home entertainment software, 2% less than the previous year.

Figures compiled by DEG: The Digital Entertainment Group on behalf of the studios show that consumers spent $16 billion on DVDs in 2007, down from $16.6 billion in 2006. Next-generation media sales, both Blu-ray Disc and HD DVD, added $300 million to the pie, while the rental business was flat at $7.5 billion.

“Consumer appetite for DVD is still very strong,” DEG executive director Amy Jo Smith said, noting that DVDs generated more cash in 2007 than music, video games or even box office receipts. “There is a softening in marketplace, but it’s not as dramatic as the headlines were letting on. And maintaining a $24 billion a year business — that’s huge.”

Added David Bishop, worldwide president of Sony Pictures Home Entertainment: “Going into it (the fourth quarter), I thought we would be down around 5%, so it beat my expectations. The sheer number and strength of titles we had in the fourth quarter is what saved us.”

Indeed, the fourth quarter saw virtually all the strong summer theatricals arrive on DVD, with studios no longer saving a choice title or two for January. December, in particular, was packed with hits, including “Pirates of the Caribbean: At World’s End,” “Harry Potter and the Order of the Phoenix,” “The Bourne Ultimatum” and “The Simpsons Movie.”

Nielsen VideoScan numbers, released last week, show a 5% decline in DVD units that actually sold through to consumers in 2007. That decline is less than the drop in consumer spending reported by the DEG for several reasons, including the influx of high-priced boxed sets, mostly of complete TV series, which still count as a single unit; the growing tendency among studios to release two or more versions of a hot new theatrical release at the same time, one packed with extras and commanding a higher street price; and a decline in catalog product, which generally tends to sell for a lot less than new releases.

The two top-selling DVDs, according to Home Media Magazine market research and the Redhill Group, were Paramount/DreamWorks’ “Transformers” and Warner Home Video’s “Happy Feet,” with respective sales of 13.7 million and 13.5 million units.

At 13.2 million units, Walt Disney Studios’ “Pirates of the Caribbean: At World’s End” was the top-selling sequel and the No. 3 title overall. Warners’ “300” finished fourth with estimated sales of 12.9 million units, followed at No. 5 by Paramount/DreamWorks’ “Shrek the Third” with 12.2 million units.

Disney’s “Ratatouille” finished sixth for the year with estimated sales of 12 million units, followed at No. 7 by Warners’ “Harry Potter and the Order of the Phoenix” (10.1 million units), Warners’ “The Departed” (No. 8, 8.9 million units), 20th Century Fox’s “Night at the Museum” (No. 9, 8.7 million units) and Universal Studios’ “The Bourne Ultimatum” (No. 10, 7.4 million units).

The DEG also says 33 million DVD players were sold to U.S. consumers in 2007, about the same as the year before, with 12 million players selling in the fourth quarter. That puts the total number of DVD players in U.S. homes to 230 million, counting portable units and televisions with built-in DVD players.

The DEG pegs the U.S. household penetration rate at 90%, with 60% of households having more than one DVD player.

Counting game consoles, 4.5 million HD media players have been sold to consumers since the first players arrived in 2006. Toshiba shipped its first HD DVD player in April 2006, while the first dedicated Blu-ray players showed up in late June — followed in November by PlayStation 3, with a built-in Blu-ray Disc drive.

Reuters/Hollywood Reporter

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