HD-DVD key to home video revenue growth

MUMBAI: A new study from Kagan Research titled The State of Home Video (11th Edition), reports that the mix of sell-through revenue is set to change as high-definition DVD takes hold of the marketplace.

“In 2006, the bulk of the $16.9 billion revenue will come from standard-definition DVD ($16.8 billion). By 2009, VHS will be virtually extinct and high-definition DVD revenue should grow to more than $2.6 billion as the format war works itself out, either via one winning format or a combination HD DVD/Blu-ray player being introduced to the market. By 2015, VHS will be history and high-definition DVD will be the major-market shareholder with $18.3 billion in revenue,” said Kagan analyst Wade Holden.

The State of Home Video reports that the boom times are gone for the home video industry and the situation may become worse in the wake of a high-definition DVD format war. Kagan estimates revenue will drop again in 2006, off 0.4 per cent to $24.1 billion. The dip will come from the decline in rental revenues, off 8.3 per cent to $7.2 billion. Sell-through revenue is estimated to grow 3.4 per cent thanks to DVD revenue hitting $16.8 billion.

Other key findings and projections from The State of Home Video include:

  • Kagan expects rental revenue will continue to decline throughout the next decade as VOD technologies gain a larger following. Total rental revenue is estimated to be $4.2 billion in 2015, posting a negative 5.8 per cent CAGR for the decade.
  • Online revenue has been steadily increasing its share of the market, grabbing 17.2 per cent in 2005, or nearly $2.8 billion. Online revenue has posted a 182 per cent CAGR since 1997, a larger growth rate than the bricks-and mortar growth of 115 per cent.
    In 2005 Kagan tracked 491 titles released on DVD and estimates they made $9.2 billion in wholesale revenue for the studios. The average wholesale price of a DVD grew 3.9 per cent to $16.70 from $16.08 in 2004.

The State of Home Video charts revenue growth and the changing economics of the dynamic home video market, examining the progression of VHS, DVD, HD-DVD and VOD.