SNL Kagan Study Projects Huge Sales Of High-Definition DVD Over Next Decade

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But Video Rental Market Suffers From VOD Competition

Video stores will just hold onto their stock to get the most out of it. You’ll see $3.00 bargain bins with VHS cassettes hanging around for a while, but it’s pretty much a done market. No one is thinking about VHS – everyone is thinking ahead towards high definition.

State of Home Video 2007, a new study from SNL Kagan, reveals that despite the small splash high-definition DVD made in the retail market in 2006 – only $42.4 million was spent on high-def in comparison to the $24.2 billion home-video market – it will be a huge market force over the next decade. SNL Kagan estimates that high-definition DVD revenues will increase from just 3.5% of the total market revenue in 2007, to 76.5% of the market in 2016.

Meanwhile, total DVD rental revenue is soaring – up 10.3% to $7.4 billion in 2005. Traditional brick-and-mortar rental revenue also grew to nearly $6.2 billion, while subscription service revenue was up 50.2% to more than $1.2 billion. But VHS rental revenue plummeted to 74% in 2006, to just $280 million from $1.1 billion in 2005. And VHS sell-through revenue continues to decline as bargain bins are cleared out.

“VHS is done for the most part -- studios aren’t shipping any new titles on VHS. We’re projecting the rental VHS market will be done by 2009, and the sell-through VHS market will be done by 2010,” said Wade Holden, senior analyst for SNL Kagan. “Video stores will just hold onto their stock to get the most out of it. You’ll see $3.00 bargain bins with VHS cassettes hanging around for a while, but it’s pretty much a done market. No one is thinking about VHS – everyone is thinking ahead towards high definition.”

The State of Home Video 2007 is an in-depth analysis of various segments of the video industry including: DVD and VHS Hardware, Performance Benchmarks, Retail Rental and Sell-Through, Sell-Through Titles, High-Definition DVD, Suppliers and Video-On-Demand.

SNL Kagan's State of Home Video report is available exclusively as part of the SNL Kagan Information Service. For more information on this report and other data sets within the SNL Kagan Information Service, call 866-296-3743 or e-mail http://www.snlkagan.com.

About SNL Kagan
SNL Kagan is the ultimate resource for complete financial intelligence on the broad and dynamic media & communications sector, including the broadcasting, cable, entertainment, motion picture, telecom, wireless, satellite, publishing and new media industries. The SNL Kagan suite of products integrates breaking news, comprehensive data and expert analysis into an electronic database available online and updated around the clock. SNL Kagan combines the 38-year heritage of Kagan Research with parent company SNL Financial's 20 years of experience in providing essential guidance to Wall Street and to America's top corporations. For more information, visit http://www.snl.com/kagan.

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