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DVD/VHS Rental & Sell Through - US

Published by: Mintel International Group Ltd.

Published: Aug. 1, 2005 - 132 Pages


Table of Contents




Introduction and Abbreviations
Introduction
Other relevant reports
Definition
Abbreviations and terms
Abbreviations
Terms
Executive Summary
A maturing market
DVD sell-through carries majority of the market
Increases in hardware penetration drove sales
Demographic and economic factors positive for market
Tightly controlled supply stream
Suppliers foot advertising bills
Wal-Mart, Target, Best Buy, Blockbuster head distribution
Internet subscription rental service growing rapidly
Three-quarters of consumers participate in the market
Theater attendance important to sales
VoD and DVR to hurt rentals
HD-DVD to provide limited support in 2006
Theatrical release windows continue to shrink
Increased piracy looming
Continued growth of DVD sales and rentals
Market Drivers

Hardware penetration
DVD and VCR households
Figure 1: U.S. household penetration of DVD and VCR players, 2000-04
Multiple-unit DVD and VCR households
Figure 2: Ownership of multiple VCR & DVD players, 2000-04
TV format penetration
Figure 3: Penetration of various TV models per household, in the U.S., 2002 and 2004
Home theater audio system households
Figure 4: Penetration of home theater audio systems, 2001-04
Portable DVD hardware
Content
Competition with other media for consumer time
Figure 5: Hours spent on various media, average consumer, annual projections, by media type, 2003-07
The battle for convenience—DVD vs. DVR and VoD
Release dates
Population characteristics
Youth participation
Figure 6: U.S. population, by age, 2000-10.
The impact of changes in racial/ethnic populations
Figure 7: U.S. population, by age and race/Hispanic origin, 2005
Distribution of income in the U.S.
Figure 8: Number of households per income group, 2000 and 2003
Figure 9: Graph: Households per income group in 2003 and change from 2000
Piracy
Market Size and Trends
Overview
Figure 10: Total U.S. retail sales and rental of video software, at current and constant prices, 1999-2005**
Figure 11: Graph: Total U.S. retail sales of video software, at current prices, 1999-2005
Shipments and sales per unit
Figure 12: Total shipments to U.S. retailers of video software and average sales per unit, 2000-05
The impact of lower rental prices
Market Segmentation
Introduction
Figure 13: Sales of home video software, segmented by rental and sell-through, by format, 2003 and 2005
Figure 14: Graph: Sales of home video software, segmented by rental and sell-through, by format, 2005
Figure 15: Graph: Trends in sales of home video software, segmented by rental and sell-through, by format, at current prices, 1999-2005
Rental sales
Figure 16: Sales of home video software rentals, at current and constant prices, 1999-2005
Figure 17: Graph: Sales of home video software rentals, at current prices, 1999-2005
Figure 18: VHS rental revenue, at current and constant prices, 1999-2005**
Figure 19: Graph: VHS rental revenue, at current prices, 1999-2005
Figure 20: DVD rental revenue, at current and constant prices, 1999-2005**
Sell-through sales
Figure 22: Sales of video software sell-through, at current and constant prices, 1999-2005**
Figure 23: Sales of video software sell-through, at current prices, 1999-2005
Figure 24: VHS sell-through revenue, at current and constant prices, 1999-2005**
Figure 25: Graph: VHS sell-through revenue, at current prices, 1999-2005
Figure 26: DVD sell-through revenue, at current and constant prices, 1999-2005**
Figure 27: Graph: DVD sell-through revenue, at current prices, 1999-2005
Supply Structure
Figure 28: Supplier sales of video software in the U.S., 2003 and 2005
Advertising and Promotion

Advertising
Retailers
Studios
Figure 29: Video software advertising in the U.S., 2004
Promotions and partnerships
Retailers
Studios
DreamWorks’ Shrek II received promotional aid in the form of $2 coupons for Croissanwiches from
Burger King in packages of DVD and VHS copies of the movie; Burger King was the promotional partner for the theatrical release as well. The fast food chain f
Retail Distribution

Overview
Preferred retail locations for purchase/rental
Source of purchases by adults
Figure 30: Preferred retail locations for DVD purchases by adults, 2002 and 2004
Figure 31: Preferred retail locations for DVD purchases, by age, January-September 2004
Source of purchases by teens
Figure 32: Preferred retail locations for DVD purchases by teens, 2002 and 2004
Choice of rental location by adults
Figure 33: Preferred retail locations for DVD rentals by adults, 2002 and 2004
Figure 34: Preferred retail locations for DVD rentals by age, January-September 2004
Online rental subscribers and buyers
Choice of rental location by teens
Figure 35: Preferred retail locations for DVD rentals by teens, 2002 and 2004
Video Specialists
Blockbuster, Inc.
Blockbuster demographics
Movie Gallery/Hollywood Entertainment
Movie Gallery/Hollywood Entertainment demographics
Independents
Mass merchandisers and warehouse clubs
Wal-Mart
Wal-Mart demographics
Target
Target demographics
Kmart
Costco
Sam’s Club
Online retailers
Netflix
Figure 36: Subscriptions and revenue for netflix, 2000-04
Amazon.com
Electronics stores
Best Buy, Inc.
Best Buy demographics
Circuit City Stores, Inc.
Music and book specialists
Musicland (Sam Goody, Media Play)
Trans World Entertainment
Hastings Entertainment, Inc.
Borders Books and Music
MTS (Tower Records)
Supermarkets
Mail order
The Consumer

Introduction
Market participation
Figure 37: Incidence of VHS or DVD rental or purchase in the previous 12 months, topline and by age, January-September 2004
Figure 38: Incidence of VHS or DVD rental or purchase in the previous 12 months, by household income, January-September 2004
Figure 39: Incidence of VHS or DVD rental or purchase in the previous 12 months, by presence of children and marital status, January-September 2004
Figure 40: Incidence of VHS or DVD rental or purchase in the previous 12 months, by race/ethnicity, January-September 2004
Figure 41: Incidence of VHS or DVD rental or purchase in the previous 12 months, by cohorts, January-September 2004
Activity correlations
Figure 42: Activities correlated to home video software purchases and rentals, January-September 2004
The relationship between cinema attendance and home video participation
Figure 43: Incidence of VHS or DVD rental or purchase in the previous 12 months, and cinema attendance in the previous six months, January-September 2004
Figure 44: Cross-analysis of incidence of VHS or DVD rental or purchase in the previous 12 months, January-September 2004
Teen participation in video software market
Figure 45: Incidence of teen VHS or DVD rental or purchase in the previous 12 months, by age and gender, January-September 2004
Child participation in video software market
Figure 46: Incidence of children’s VHS or DVD rental or purchase/gift in the previous 12 months, by age and gender, January-September 2004
Frequency of DVD purchases or rentals
Figure 47: Number of DVDs purchased/rented, by selected demographics, January-September 2004
Frequency of consumption by cohort
Frequency of consumption among teens
How rental activity compares to purchasing activity for DVDs
Preferred content
Adults
Figure 48: Types of home video product rented or purchased by adults, January-September 2004
Teens
Figure 49: Types of home video product rented or purchased by teens, January-September 2004
Selection of content by or for children
Figure 50: Whether child picks out movies rented, by gender and age, January-September 2004
Subscription to an Internet service
Heavy vs. light users of home video software
Figure 51: Heavy and light users of home video product, topline and by age, June 2005
Figure 52: Heavy and light users of home video product, by household income, June 2005
Attitudes towards home video compared to competing forms of entertainment
Figure 53: Attitudes towards home video software in relation to competing forms of entertainment, topline and by age, June 2005
Other significant demographic results
Attitudes of heavy users compared to light users
Figure 54: Attitudes towards home video software in relation to competing forms of entertainment, by heavy/light buyers, June 2005
Figure 55: Attitudes towards home video software in relation to competing forms of entertainment, by heavy/light renters, June 2005
Attitudes towards video content
Figure 56: Attitudes towards home video content, topline and by age, June 2005
Other significant demographic results
Attitudes towards purchasing DVDs
Figure 57: Attitudes towards purchasing home video product, topline and by age, June 2005
Other significant demographic results
Attitudes towards downloading films
Figure 58: Attitudes towards purchasing home video product, by heavy vs. light buyers, June 2005
Figure 59: Attitudes towards purchasing home video product, by heavy vs. light renters, June 2005
Attitudes towards the quality of feature film content
Figure 60: Attitudes towards quality of content, by level of software consumption, by heavy vs. light buyers, June 2005
Figure 61: Attitudes toward quality of content, by level of software consumption, by heavy vs. light renters, June 2005
Summary
Future and Forecast
Future trends
Piracy
Combating piracy
HD-DVD
Impact of DVR
Impact of VoD
Legal downloads (IPVoD)
DVD hardware penetration growth to slow
Prices to decline under onslaught of piracy and digital delivery
Uptake of broadband to fuel Internet sales
Tinkering with release windows
Demographic change
MARKET FORECAST
DVD rental
Figure 62: Forecast of U.S. DVD rental revenue, at current and constant prices, 2005-2010
DVD sell-through
Figure 63: Forecast of U.S. DVD sell-through revenue, at current and constant prices, 2005-2010
Forecast Factors
Appendix: Trade Resources

Appendix: Cohort Definitions

Appendix: Research Methodology

Consumer Research
Sampling & Weighting
Technometrica TechnoExpresssm
ICR Surveys EXCEL
Simmons National Consumer Surveys
Greenfield Online
Presentation & Definition
Further Analysis
Trade Research
Informal trade research
Formal trade research
Desk & Internet Research
Sources
Definitions
Forecasts

Abstract

As technology advances, the VCR and DVD market must not just remain stable, but continue to grow to maintain its hold in the industry. While retail video rentals have dropped some 10% from 2004, the introduction of online rental services poses a serious threat. In just one year (August 2004 to August 2005), Blockbuster’s online rental service has grown to 1 million subscribers. Its main online service competitor, Netflix, has 3 million subscribers.

DVD-player ownership quadrupled from 2000 to 2002 and nearly doubled in 2004. Nearly one-fifth of surveyed consumers reported having at least three DVD players per household, showing that this technology is the new standard, and many consumers want a DVD player for each television set.

Intriguing findings include:

  • By year-end 2004, a total of 42,500 movie titles were available in the United States.
  • Piracy is estimated to cost the industry $3.5 billion in sales globally each year.
  • Older children buy/receive/rent home video product more than younger children.

    For the purposes of this report, Mintel defines the video market as the market for pre-recorded VHS video and DVD products, both rentals and purchased. Sales of pre-viewed VHS by rental shops are included, while sales of used products between consumers are not. Internet subscription services are included in this report. Sales of Universal Media Disc and mini-DVDs are not included in this report. This report also excludes blank recordable videos and DVDs, audio CDs, DVDs, and computer software. Hardware is not included in sales figures for this report.

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