Steve Redmond notes how a string of blockbusters has put the emphasis back on physical sales in the video business

Monday June 3, 2013

We are now five years off DVD's peak, and inevitably attention has turned to the nascent digital video market, but latest market figures suggest it is way too soon to write off the physical market just yet. A string of well-spaced and well-marketed blockbusters has seen the video business managing its evolving portfolio of formats far more effectively than even as recently as last year.

Combined year-to-date sales volumes of DVD and Blu-ray are currently down less than 4% on the same period last year, and - sound a fanfare - sales value has actually increased by an impressive 4.2%. Compare that with 2012's year-end video tally of units down nearly 14% and value down nearly 12% and that's a significant improvement.  Given this has happened against the background of the UK's biggest High Street specialist, HMV's,  struggle with administration and the figures are impressive indeed.

The key to this improved performance is simple and will come as no surprise to retailers - it is something they have been lobbying suppliers about for months: a strong release schedule.

2013 began in fine style with Skyfall, which has now sold an astonishing 2.5m units [on disc], but importantly the trend has continued with The Hobbit - An Unexpected Journey (1.3m units), Les Miserables (933k) and The Twilight Saga - Breaking Dawn  Part Two (930k). All four titles have sold enough to have featured in 2012's year-end Top 10, and Skyfall has already sold nearly 50% more than did 2012's best-seller,The Dark Night Rises (1.69m units).

Retailers have long argued that such blockbusters are not just important as big-sellers in their own right, but they bring in their wake at least two other benefits. First, there are the additional impulse purchases blockbusters bring, and the strong 25% year-to-date growth in catalogue sales on Blu-ray may well be testament to this. But there is also the impact on pricing - in a mature market like video, retailers need premium content to drive premium prices. In 2013 the average selling price of a DVD has firmed a respectable 6.4% to £7.98.

DVD is of course only part of the story: what is in some ways even more impressive is the return of Blu-ray to vigorous growth. 2012 was a disappointment on many levels, but the slowing in the growth of Blu-ray to just 8.4% (volume) and a measly 2.7% (value) was
perhaps the most dramatic example. 2013 have [has] brought a breath of fresh air along with those big-selling titles and year-to-date Blu-ray growth is up 36% by volume and 39% by value.

Now that is something worth shouting about.

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