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HD-DVD Key to Home Video Revenue Growth, says Kagan Research

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A new study from Kagan Research, THE STATE OF HOME VIDEO (11TH EDITION), reports that the mix of sell-through revenue is set to change as high-definition DVD takes hold of the marketplace.

“In 2006, the bulk of the $16.9 bil. revenue will come from standard-definition DVD ($16.8 bil.),” said Wade Holden, Kagan analyst. “By 2009, VHS will be virtually extinct and high-definition DVD revenue should grow to more than $2.6 bil. as the format war works itself out, either via one winning format or a combination HD DVD/Blu-ray player being introduced to the market. By 2015, VHS will be history and high-definition DVD will be the major-market shareholder with $18.3 bil. in revenue.”

THE STATE OF HOME VIDEO reports that the boom times are gone for the home video industry and the situation may become worse in the wake of a high-definition DVD format war. Kagan estimates revenue will drop again in 2006, off 0.4% to $24.1 bil. The dip will come from the decline in rental revenues, off 8.3% to $7.2 bil. Sell-through revenue is estimated to grow 3.4% thanks to DVD revenue hitting $16.8 bil.

Other key findings and projections from THE STATE OF HOME VIDEO include:

  • Kagan expects rental revenue will continue to decline throughout the next decade as VOD technologies gain a larger following. Total rental revenue is estimated to be $4.2 bil. in 2015, posting a negative 5.8% CAGR for the decade.
  • Online revenue has been steadily increasing its share of the market, grabbing 17.2% in 2005, or nearly $2.8 bil. Online revenue has posted a 182% CAGR since 1997, a larger growth rate than the bricks-and mortar growth of 115%.
  • In 2005 Kagan tracked 491 titles released on DVD and estimates they made $9.2 bil. in wholesale revenue for the studios. The average wholesale price of a DVD grew 3.9% to $16.70 from $16.08 in 2004.

THE STATE OF HOME VIDEO charts revenue growth and the changing economics of the dynamic home video market, examining the progression of VHS, DVD, HD-DVD and VOD. Kagan’s authoritative 10-year projections for both rental and sell-through sectors are offered as a digital package with a bookmarked PDF of analyst commentary, Excel-based data tables and a companion print databook.

For table of contents and more information on THE STATE OF HOME VIDEO (11TH EDITION) go to http://www.kagan.com/SHV-11

About Kagan Research, LLC
For nearly 37 years, media and communications operators, content providers and institutional investors have relied on Kagan Research for thought leadership in media business research. Kagan’s consulting, publishing and data services provide exclusive benchmarking data and analysis, market advisories and long-range forecasts for TV, radio, cable, satellite, wireless, movie and sports sectors, as well as informed perspectives on emerging media, digital communications, and Internet technologies. Kagan is one of the world leaders in valuing and appraising media assets. For more information, visit http://www.kagan.com. Kagan Research is a division of JupiterKagan, Inc.

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About JupiterKagan, Inc.
JupiterKagan, Inc. was formed in 2006 from the merger of JupiterResearch and Kagan Research, two companies providing thought leadership, research and advice in the domain of the media and telecommunications, the Internet and emerging consumer technologies. The company’s deliverables include continuous information services (available by subscription), research reports, data, inquiries with research analysts, appraisals, litigation support and consulting. JupiterKagan operates from five offices in the United States, United Kingdom and France. For more information, visit http://www.jupiterkagan.com.

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