by George Heymann

Will video on demand services like Netflix make DVDs a thing of the past?

by A. Montaqim

Technology Market

A newly-released SNL Kagan study, The Economics of TV and Film, reveals that 2010 was similar to 2009 in that the domestic box office hit a record high, once again, while the domestic video retail market was continuing its steady decline. Consumers are now opting to sign up for streaming and/or rental services, like Netflix. They are using video on demand (VOD) services more and more, as they discover these services can be cost effective.

Unfortunately for studios, according to SNL Kagan, the revenue from VOD has not yet offset the resulting drop in DVD sale revenue, which was their top earner for more than a decade now.

“SNL Kagan tracked 415 titles in our database that were released on DVD in 2010, and among those titles wholesale revenue dropped by 43.9% from $7.97 billion in 2009 to $4.47 billion in

Avatar was the number one DVD in 2010, shipping over 10.3 million units and making $207.5 million in revenue

2010,” said a spokesperson. “It is important to note that this does not include Blu-ray revenue, which grew significantly in 2010. It should also be noted that this sample of the video market does not include library titles, direct-to-video titles and TV on DVD, as well. When looking at the video retail market as a whole, consumer spending only declined 10.8% to $11.86 billion in 2010.”

The average wholesale price was relatively flat when compared with 2009, but there were significantly fewer units shipped, down 43.8% to nearly 226.0 million.

On average, films shipped 545,000 units and made $10.8 million in wholesale revenue, off 52.4% from the $22.6 million average in 2009. Over the past five years, average wholesale revenue posted a negative 13.7% compound annual growth rate.

Fox claimed victory once again in 2010 in terms of market share, thanks primarily to Avatar. The distributor had 15 titles in the study, and those titles took in $605.9 million from 30.1 million DVDs shipped.

Buena Vista trailed right behind Warner, bringing in $600.6 million from 29.8 million units shipped. Rounding out the top five were Columbia, with a 10.1% share from $453.3 million, and Universal, with a 9.9% share from $443.5 million.

Avatar was the number one DVD in 2010, shipping over 10.3 million units and making $207.5 million in revenue—approximately 34.5% of Fox’s total wholesale revenue.

Toy Story 3 ranked second, with $201.8 million from more than 10.0 million units shipped. Meanwhile, Twilight: New Moon and Twilight: Eclipse ranked third and fourth, respectively, with $174.8 million and $160.7 million.

Overall, the top 15 DVDs of 2010 made $1.78 billion in wholesale revenue, averaging $118.7 million. On average, the top 15 shipped 5.9 million units shipped.


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One Response

  1. Lucie Hettler says:

    Hi there, just became alert to your blog through Google, and found that it is really informative. Cheers!

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