DVD Drives Video Industry to Record-Breaking Year; Home Video Enjoys $22.5 Billion in Annual...

Business & Entertainment Editors/High-Tech Writers

2004 International CES

LAS VEGAS--(BUSINESS WIRE)--Jan. 8, 2004

For the second consecutive year, DVD sales have helped make home video America's most popular entertainment medium with consumer spending exceeding

that of movie tickets, video games, music and mass-market books, announced today by the DEG: The Digital Entertainment Group at the International Consumer Electronics Show. In 2003, consumers spent $22.5 billion renting and buying DVD and VHS versus $9.2 billion moviegoers spent at the theatrical box office.

Consumer spending on home video was up 18.2 percent over last year with DVD representing 72 percent of all home video transactions. DVD retail sales grew to $11.6 billion in calendar 2003, an increase of 33 percent over last year. Consumers also spent $4.5 billion renting DVDs, up 55 percent from 2002.

The fourth quarter was particularly strong for DVD with more than 381 million DVD titles shipped to retail according to figures compiled by Kaplan, Swicker and Simha on behalf of the DEG. This is a 43 percent increase over the fourth quarter 2002. More than one billion software units were shipped in 2003 bringing the total number of units shipped since launch to nearly 2.4 billion discs.

 NORTH AMERICAN DVD-VIDEO SOFTWARE SHIPMENTS BY QUARTER (in millions)

  QUARTER        1997  1998   1999   2000   2001    2002       2003
----------------------------------------------------------------------
1st Quarter       N/A   3.3   11.1   29.0   69.2    120.1      231.7
----------------------------------------------------------------------
2nd Quarter       N/A   4.1   13.9   33.2   81.7    152.2      195.5
----------------------------------------------------------------------
3rd Quarter       2.3   5.9   29.0   42.7   75.9    153.3      214.6
----------------------------------------------------------------------
4th Quarter       3.2  11.8   44.0   77.5  137.6    259.4      381.5
----------------------------------------------------------------------
YEARLY TOTAL      5.5  25.1   98.0  182.4  364.4    685.0     1023.3
----------------------------------------------------------------------
TOTAL                  30.6  128.6  311.0  675.4  1,360.4    2,383.7
                                                        (a/o 12/31/03)

                        Figures compiled by Kaplan, Swicker & Simha on
                        behalf of the DEG: Digital Entertainment Group

"With sales of both hardware and software reaching new record levels, the DVD format has emerged as the dominant format in the home entertainment industry," said Bob Chapek, president of Buena Vista Home Entertainment and president of DEG: The Digital Entertainment Group. "We should all look ahead with unbridled enthusiasm as the growth of this format grows further into the mass market which will prove to open even more doors for this industry."

There are currently some 29,000 DVD titles available. "Finding Nemo" (Buena Vista Home Entertainment) topped the year's DVD sales followed by numerous DVDs that broke sales records in 2003, selling in excess of five million copies.

    DVD-VIDEO TITLES THAT SOLD IN EXCESS OF 5 MILLION UNITS IN 2003
                        (in alphabetical order)

                 TITLE                             STUDIO
--------------------------------------- -----------------------------
2 Fast 2 Furious                        Universal Studios Home Video
--------------------------------------- -----------------------------
8 Mile                                  Universal Studios Home Video
--------------------------------------- -----------------------------
Bad Boys 2                              Columbia TriStar Home
                                         Entertainment
--------------------------------------- -----------------------------
The Bourne Identity                     Universal Studios Home Video
--------------------------------------- -----------------------------
Bringing Down the House                 Buena Vista Home Entertainment
--------------------------------------- -----------------------------
Bruce Almighty                          Universal Studios Home Video
--------------------------------------- -----------------------------
Catch Me If You Can                     DreamWorks Home Entertainment
--------------------------------------- -----------------------------
Chicago                                 Buena Vista Home Entertainment
--------------------------------------- -----------------------------
Die Another Day                         MGM Home Entertainment
--------------------------------------- -----------------------------
Finding Nemo                            Buena Vista Home Entertainment
--------------------------------------- -----------------------------
Freaky Friday                           Buena Vista Home Entertainment
--------------------------------------- -----------------------------
Harry Potter and the Chamber of Secrets Warner Home Video
--------------------------------------- -----------------------------
Indiana Jones Collection                Paramount Home Entertainment
--------------------------------------- -----------------------------
The Lion King: Special Edition          Buena Vista Home Entertainment
--------------------------------------- -----------------------------
The Lord of the Rings: Two Towers       New Line Home Entertainment
--------------------------------------- -----------------------------
The Matrix Reloaded                     Warner Home Video
--------------------------------------- -----------------------------
My Big Fat Greek Wedding                HBO Video
--------------------------------------- -----------------------------
Old School: Unrated                     DreamWorks Home Entertainment
--------------------------------------- -----------------------------
Pirates of the Caribbean: The Curse of  Buena Vista Home Entertainment
 the Black Pearl
--------------------------------------- -----------------------------
The Ring                                DreamWorks Home Entertainment
--------------------------------------- -----------------------------
Scarface                                Universal Studios Home Video
--------------------------------------- -----------------------------
Seabiscuit                              Universal Studios Home Video
--------------------------------------- -----------------------------
Signs                                   Buena Vista Home Entertainment
--------------------------------------- -----------------------------
Sweet Home Alabama                      Buena Vista Home Entertainment
--------------------------------------- -----------------------------
Terminator 3                            Warner Home Video
--------------------------------------- -----------------------------
The Santa Clause 2                      Buena Vista Home Entertainment
--------------------------------------- -----------------------------
X2: X-Men United                        Twentieth Century Fox Home
                                         Entertainment
--------------------------------------- -----------------------------
XXX                                     Columbia TriStar Home
                                         Entertainment

                                          Source: Video Store Magazine



                TOP 10 DVD-VIDEO RENTAL TITLES IN 2003
                             (by ranking)

                 TITLE                             STUDIO
--------------------------------------- -----------------------------
The Bourne Identity                     Universal Studios Home Video
--------------------------------------- -----------------------------
Catch Me If You Can                     DreamWorks Home Entertainment
--------------------------------------- -----------------------------
Old School                              DreamWorks Home Entertainment
--------------------------------------- -----------------------------
Bringing Down the House                 Buena Vista Home Entertainment
--------------------------------------- -----------------------------
Signs                                   Buena Vista Home Entertainment
--------------------------------------- -----------------------------
How to Lose A Guy In 10 Days            Paramount Home Entertainment
--------------------------------------- -----------------------------
The Ring                                DreamWorks Home Entertainment
--------------------------------------- -----------------------------
My Big Fat Greek Wedding                HBO Video
--------------------------------------- -----------------------------
Sweet Home Alabama                      Buena Vista Home Entertainment
--------------------------------------- -----------------------------
Phone Booth                             Twentieth Century Fox Home
                                         Entertainment

                                                       Source: Rentrak

Music on DVD Swells In Popularity

Music on DVD titles, including both DVD Music Video and DVD-Audio, continue to be a growing part of the DVD format. Sales for DVD Music Video titles jumped 102 percent in 2003, to 17.2 million units, according to Nielsen SoundScan. Total sales are expected to climb higher still for the coming year.

There are currently more than 4,000 DVD Music Video and DVD-Audio titles available. All of these can be played on a current DVD player, or in a DVD-Audio/Video model to experience the Advanced Resolution sound of DVD-A titles. As with DVD Music Video, DVD-Audio offers fans "backstage access" to bonus features such as additional footage, lyrics, exclusive photos and other extras.

DVD Music Video titles are available from a variety of artists across a broad range of genres, with some of 2003's bestsellers including DVDs from Cher (Image Entertainment), Dixie Chicks (Columbia Records), Norah Jones (BlueNote Records), Dave Matthews Band (RCA Records), Paul McCartney (Capitol Records), Rolling Stones (Redline Entertainment), Tenacious D (Epic Records) and Led Zeppelin (Atlantic Records). Top DVD-Audio discs of the year also featured a variety of artists such as The Beach Boys (Capitol Records), Blue Man Group (Virgin Records), Fleetwood Mac (Warner Bros. Records), Queen (DTS Entertainment), R.E.M. (Capitol Records), Santana (Arista Records), Sting (Universal Music Group).

More Than 90 Million DVD Players Sold in the U.S.

According to figures compiled by the DEG based on data from the Consumer Electronics Association (CEA), retailers and manufacturers, nearly 34 million DVD players were sold to U.S. consumers in 2003, approximately a 34 percent increase over last year. And, nearly 17 million DVD players sold in the fourth quarter alone, a 29 percent increase over the same period last year.

In total, more than 90 million DVD players have sold since launch, bringing the number of DVD households to nearly 57 million (adjusting for households with more than one player). Due to the variety of players available, approximately 37 percent of DVD owners have more than one player.

"DVD players have a profound impact on the consumer electronics landscape," said Joe Stinziano, general manager, home audio/video, Sony Electronics and vice president, DEG. "And, with the broad range of hardware available, DVD will play an even greater role in the future."

           U.S. DVD HARDWARE SALES BY QUARTER (in millions)

  QUARTER        1997  1998   1999   2000   2001    2002       2003
---------------- ----- ----- ------ ------ ------- ------- ----------
1st Quarter      .030  .094   .358  1.350   2.220   3.565      4.858
---------------- ----- ----- ------ ------ ------- ------- ----------
2nd Quarter      .079  .149   .611  1.435   2.404   3.750      5.506
---------------- ----- ----- ------ ------ ------- ------- ----------
3rd Quarter      .077  .244   .880  1.550   2.537   4.740      6.470
---------------- ----- ----- ------ ------ ------- ------- ----------
4th Quarter      .119  .459  1.701  5.542   9.501  13.058       16.9
---------------- ----- ----- ------ ------ ------- ------- ----------
YEARLY TOTAL     .305  .946  3.550  9.877  16.662  25.113     33.734
---------------- ----- ----- ------ ------ ------- ------- ----------
TOTAL                                                          90.187
(since launch)                                          (a/o 12/31/03)

              Includes set-top and portable DVD players, Home Theater
              in a Box systems, TV/DVD and DVD/VCR combination players

                                  DEG: The Digital Entertainment Group

The DEG estimates that 30 million additional players will be sold in 2004 bringing household penetration to about 65 percent. The DEG projects that two out of every three homes will have a DVD player by the end of 2004.

The DEG: Digital Entertainment Group (formerly the DVD Entertainment Group) is a Los Angeles-based, industry-funded nonprofit corporation that advocates and promotes the many benefits associated with DVD while providing updated information regarding the format to both the media and the retail trade. As an industry-funded, nonprofit organization, the DEG offers opportunities for member companies to engage in ongoing discussions concerning various issues and opportunities, which relate to other new digital technologies that may emerge in the future.

Regular members of the DEG are Buena Vista Home Entertainment, Columbia TriStar Home Entertainment, DreamWorks Home Entertainment, DTS Entertainment, EMI Recorded Music, HBO Video, Image Entertainment, JVC Company of America, Lions Gate Entertainment, MGM Home Entertainment, New Line Home Entertainment, Panasonic Consumer Electronics, Paramount Home Entertainment, Philips Consumer Electronics, Pioneer Electronics (USA), Sony Electronics, Sony Music Entertainment, Thomson, Toshiba America Consumer Products, Twentieth Century Fox Home Entertainment, Universal Music Group, Universal Studios Home Video and Warner Home Video.

Associate members are Alta Resources, Blink Digital, Clear-Vu Products, Deluxe Media Services, Digital Video Compression Corporation, InterActual Technologies, Macrovision, Metropolis DVD, MX Entertainment, Muze, Sonopress, Sony Disc Manufacturing and Technicolor.

Interested consumers can reach the DEG at (310) 967-2940, via e-mail at getinfo@digitalentertainmentinfo.com or through its web site at www.digitalentertainmentinfo.com.