THE EUROPEAN HOME ENTERTAINMENT MARKET IS RAPIDLY BECOMING DISC-BASED

FOR IMMEDIATE RELEASE:

THE EUROPEAN HOME ENTERTAINMENT MARKET IS RAPIDLY BECOMING DISC-BASED - AS DVD SALES START TO CANIBALISE THE VHS MARKET - CLAIMS NEW SCREEN DIGEST REPORT

Western European consumer spending on DVD software is forecast to increase by more than 150% between 2002 and 2006, to €15.3bn ($13.7bn) -- 85% of total spending on video software.

London, UK, September 25, 2002 - The European video software market is moving swiftly from tape to disc. Sales of VHS tapes in Western Europe are expected to fall by six per cent in volume in 2002, despite the availability of two of the industrys biggest titles for years, 'Harry Potter and 'Lord of the Rings. However, record-breaking DVD sales and rentals are more than making up for the decline in VHS spending. According to a new report by Screen Digest 'European Video: Market Assessment & Forecasts 2001-2006, Western European consumers will spend €5.9bn ($5.3bn) on buying and renting DVD software in 2002. The report also predicts that of the total video sales volume in Western Europe this year, nearly fifty percent will represent DVDs.

The author of the report, John Miller, asserts the increased availability of affordable DVD Video players across most European markets has been a major factor in consumers rapid take-up of DVD. By 2006 -- within eight years of its launch - the digital format will have achieved a level of TV household penetration that took the VCR more than 20 years to reach".

When considering other TV-based DVD platforms, such as video games consoles (e.g. Playstation2 and Xbox) and DVD recorders, the number of European DVD equipped homes becomes significantly larger. By the end of 2006, Screen Digest forecasts that approximately 100m European homes will own a standalone DVD Video player, and nearly 25m more will have either a DVD console or a DVD recorder. As result, by 2006 77% of Western Europes television households will own at least one TV-based machine capable of playing DVDs.

But despite consumers rapid adoption of the new digital format, Screen Digest does not foresee the complete demise of the VHS business -- as many suggest. VHS will still represent an important part of the Home Entertainment business, generating upwards of €3bn ($2.8bn) in rental and retail spending in 2006", claims the author.

For more information on European Video: Market Assessment & Forecast 2001-2006 go to www.screendigest.com or contact Elizabeth Phillipson at elizabeth.phillipson@screendigest.com or telephone (44) 020 7424 2820.