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          Even before DVD household penetration takes what should be a fourth-quarter leap from less than 20 mil. homes to almost 25 mil., the new format is helping the software side of the business set new records. For example, supplier revenue on new releases priced for VHS rental in the third quarter was up an incredible 45% over the third-quarter 2000 slate. 

           Of course, it didn’t hurt to have a slate with huge box-office firepower behind it: all-told the slate did 51% more at the box-office than last year’s rental titles and had “must-rent” titles like Hannibal and The Family Man. And indeed the DVD pay-off has been most obvious with such “A” titles (those doing more than $5 mil. at the box office). 

        Although the average VHS units shipped on these titles slid about 3% to 453,000 per title, the average “A” rental title nearly doubled its DVD shipment to about 537,000 units. That added up to a 69% increase in the total supplier take on these top titles.
         Supplier revenue on direct-to-video titles was up slightly, and the gains in those two categories more than made up for a decline in the revenue from “B” theatrical releases. 

Chart (above) shows DVD spending beginning to outpace studio DVD revenue as the number of units being sold to fill the pipeline levels out while consumer spending explodes. 
          On the other hand, the total supplier take on new releases priced for VHS sell-through fell a steep 26%, even though the box-office take on the titles was off only 4% from the year before. The DVD take on the titles jumped 38% over the previous year, but that was not enough to make up for a 36% decline in the VHS revenue on a slate led by Spy Kids, but without any other $100 million box-office hits.                          BACK to Home

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