Music Dvd Sales Gain, But Biz Still Needs Boost

Music DVD sales are expected to grow steadily through 2010, according to a report issued by London-based Informa Telecoms and Media. Despite the bright outlook, U.S. DVD share lags the other parts of the world.

The "Global Music Forecasts" report shows global audio music sales in 2004 were down 2.9% to $29.4 billion, while music video revenue rose 26.3% to $2.7 billion—making up more than 8% of the market. Linkin Park led the Top Music Video Sales chart in Billboard for last year. "Live in Texas" (Warner) sold 440,000 units.

Informa predicts that in 2005, the value of audio sales will remain nearly flat, but music video sales, driven entirely by DVD, will increase 17.6%.

While DVD unit counts are up, Martin Dyson, Informa senior analyst and author of the report, emphasizes that "the United States has one of the lowest shares of revenues from video sales for most of the developed music markets."

In 2004, the U.S. share of total music revenue from video sales was 4.7%, up from the previous year's 3.3%. U.S. music video sales are forecast to rise at an average annual rate of more than 15% leading up to 2010 and grow to nearly $1.26 billion.

However, the overall share of U.S. music revenue derived from video will increase by only slightly more than 8% of the projected $13.9 billion total.

Ralph Tribbey, editor of the weekly DVD Release Report, says, "While the number of [music DVD] releases showed strong year-over-year growth in 2004—up 18.7% with 1,327 titles versus 1,118 in 2003—the category continues to underperform with respect to sales.

"While 12.3% of all DVD titles released in 2004 were music, they accounted for less than 2% of overall DVD sales," he adds.

"Much of this can be laid directly at the doorstep of the music suppliers themselves and their lack of understanding on how the home entertainment market works," Tribbey says.

He points out that the DVD marketplace, regardless of content, is dominated by the Hollywood studios, and that the dynamics of sales, marketing and PR are very different from the music business.

"The recording industry cannot continue to announce [music DVD] products on Thursday for release on the following Tuesday and expect to be competitive," he says.

"Further, the music [video] labels must understand that they are not just competing with each other but with the studios for both shelf space and consumer dollars in the DVD category.

"Until they get their act together, just throwing more and more titles against the wall will not be a sign of success or overall growth but an act of desperation," he concludes.

However, Tribbey believes music DVD releases will continue to expand in 2005 and beyond. "Momentum is driven by external factors," he says. "The need to offer more than just a CD seems to be a major market feature."

GROWTH FORECAST

The Informa report shows the global music video sector will continue to rise between now and 2010 at an average annual rate of 9.4% to reach $4.9 billion—or almost 13% of total projected music sales of $38.7 billion.

The growth of audio revenue is expected to be modest and will be driven by digital sales rather than physical formats.

The outlook in the United States is even brighter, according to Dyson. "While total U.S. music sales in 2004 increased by 1.4% to slightly more than $12 billion, the sharpest growth came from music video, with an estimated 30 million-plus units sold, valued at more than $484 million, a 33% gain from the prior year."

DVD hardware penetration is helping drive the market. By the end of last year, about 55% of U.S. households had at least one DVD player. That number is expected to reach 91% in 2010.