Rental Spending Up 8% In Q1

With home video executives and retailers predicting high interest in the DVD format for at least the next three years (Billboard, April 5), it is not surprising that DVD helped create a new record for rental revenue in first-quarter 2003, according to the Los Angeles-based Video Software Dealers Assn. (VSDA).

Combined spending on VHS and DVD rentals totaled $2.34 billion, an 8% increase over first-quarter 2002. The previous first-quarter record occurred in 2001, when $2.26 billion in rental revenue was generated.

The DVD format accounted for 49% of rental revenue in the first quarter; DVDs only accounted for 26% of rental revenue in first-quarter 2002. Total spending on DVD rentals increased 83% over first-quarter 2002. Spending on VHS rentals dropped 23% compared with the same time frame in 2002.

This year's first-quarter turns, or units rented, were 811 million combined VHS and DVD units. Consumers rented a total of 448 million VHS units and 363 million DVDs, spending $1.19 billion on VHS and $1.15 billion on DVD. Total turns increased 4.2% over first-quarter 2002.

According to the VSDA, Universal Studios Home Video's The Bourne Identity generated the most DVD rental revenue ($36.4 million). Buena Vista Home Entertainment's Signs earned second place with $34.7 million, and HBO Home Video's My Big Fat Greek Wedding earned $29.6 million. Other top titles include Sweet Home Alabama (Buena Vista, $29 million), Barbershop (MGM Home Entertainment, $26 million), The Ring (DreamWorks Home Entertainment, $20.1 million), Road to Perdition (DreamWorks, $19.4 million), One Hour Photo (Twentieth Century Fox Home Entertainment, $18.6 million), About a Boy (Universal, $17.9 million), and The Banger Sisters (Fox, $16.3 million).

The VSDA attributed high demand for video rentals to three factors: a strong slate of first-quarter new releases, the increase in new-DVD-player owners during the holiday season, and harsh weather conditions in parts of the country that created higher demand for at-home entertainment.

VSDA president Bo Andersen says, "DVD was just short of being half of the rental revenue for the whole first quarter. It means to me that going forward, DVD is regularly going to outperform VHS in rental revenue. What I thought was remarkable is that this performance could happen among war and joblessness jitters and in an economy when a lot of retail is down. It means that DVD is a product that is integral to American culture."