VHS Is Not Dead

Started by J.A.F._Doorhof, June 24, 2002, 11:55:06

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J.A.F._Doorhof

Format Remains Dominant In Video Rentals And Will Co-Exist With DVD, According To The VSDA
ENCINO, Calif.--(ENTERTAINMENT WIRE)--June 21, 2002--Contrary to reports of its demise, and despite the flurry of DVD activity at the retail rental and sales level, the VHS format continues to be the rental choice of consumers by a margin of almost three-to-one, and will continue to co-exist with DVD in American households, according to Bo Andersen, president of the home video and entertainment industry's international trade group -- the Video Software Dealers Association (VSDA).

"The VHS format is alive and well, and rumors to the contrary are dead wrong. While DVD is a phenomenal gift -- to both consumers and the home video entertainment industry -- VHS and VCRs are not going to disappear," said Andersen.

"While some retailers, based on their market, are deciding to concentrate solely on DVD, we expect VHS to continue to be widely available for purchase and rental for the foreseeable future. The VHS format will decline naturally with the growth of DVD, but it is far too soon to write its obituary," added Andersen.

According to VSDA's VidTrac program -- the video industry's most accurate video rental point-of-sale tracking technology for measuring national consumer video rental spending, based on actual rental transactions -- the 2002 year-to-date video rental market (weeks ending 6 January - 16 June) demonstrates a significant gain in favor of DVD, growing 14 percentage points in market share in less than six months. Even so, the 2002 year-to-date numbers show consumers have spent $2.7 billion renting VHS (999 million rentals) versus $1.2 billion renting DVDs (372 million rentals).


   2002 Year-to-Date Video Rental Market Shares (Revenue) by Format

                               VHS - 69%
                               DVD - 31%

        Source: 2002, VSDA/VidTrac (weeks ending 1/6-6/16/2002)

"The excitement for DVD products continues to grow at a rapid pace, and there is a natural transference of VHS turns toward DVD. However the VHS format still remains strong in both rental turns and revenues," said VSDA's Director of Research, Brad Hackley.

Looking at hardware penetration levels for both DVD and VHS for the remainder of 2002, Kagan World Media estimates that DVD players will be in 35 million of the 103 million U.S. TV households, while VCR households will reach 94 million. For 2003, Kagan estimates DVD penetration to reach 48 million households and VCR penetration to reach 95 million.

According to Consumer Electronics Association, 4.7 million DVD players were sold to dealers for the period January 6 to May 26, 2002 (21 weeks). However, during the same period, 4 million VCR decks and 1.3 million TV/VCR combos were also sold.

"Clearly DVD players have increased in sales, but VCR sales are still strong," added Andersen. "Consumers are continuing to buy VCR players as well as DVD players."

"There is no ignoring the phenomenal growth in the DVD video rental market," said Hackley. "However the facts do not currently indicate an either/or proposition. The growth of the DVD format does not mean the necessary and imminent elimination of VHS. VHS rental revenues, while decaying in relation to last year, remain robust and the fundamental staple of home video.

"There are superior benefits to DVDs, for example greater picture clarity and the inclusion of additional scenes and outtakes, along with it being a no-rewind format. However, VHS supports the recordability aspect of the home video library, and until price points on recordable DVD players fall within the reach of the average consumer, VCRs will be preferred for home recording," Hackley added.

"At the moment, DVD players exist in one out of every four households -- an exciting record-breaking achievement after just five years on the market," said VSDA's Andersen. "I estimate we will reach a 50% penetration of DVD in American households by late 2004, and yet I envision most every one of those households will frequently use a VCR to play a prerecorded VHS cassette."

Established in 1981, the Video Software Dealers Association (VSDA) is a not-for-profit international trade association for the approximate $19 billion home entertainment industry. VSDA represents over 1,700 companies throughout the United States, Canada, and a dozen other countries. Membership comprises the full spectrum of video and video game retailers (both independents and large chains), as well as the home video divisions of major and independent motion picture studios, and other related businesses that constitute and support the home video entertainment industry.

Editors Note: Charts and artwork are available upon request to illustrate this research in your stories. Please contact kelli.warren@vsda.org or (818) 385-1500 Ext. 223.

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