HOME ENTERTAINMENT ENJOYS ANOTHER OUTSTANDING YEAR

DVD Remains Consumers Preferred Choice for Entertainment

HD Media Devices Sell Through Nearly 4.5 Million Units

Consumer Spent Nearly $300 Million On High Definition Discs
     

      LAS VEGAS ( Jan. 7, 2008) The home entertainment market proved remarkably stable in 2007 despite challenging economic factors including the housing slump, credit crunch and rising gas and food costs, it was announced today by DEG: The Digital Entertainment Group at the International Consumer Electronics Show (CES.) Nevertheless, DVD and HD media sales remained resilient with consumer spending in excess of $23.5 billion for the year. This tremendous sustainability underscores that the buying and renting of packaged media remains a core spending choice for U.S. consumers who have grown accustomed to the enhanced experience and convenience the medium provides.

      In spite of increased competition from online and other digital entertainment options, DVD and HD packaged media were consumers’ preferred choice of entertainment in 2007. In fact, spending on home entertainment media was greater than that of music, video games and box office returns this past year. The DEG is enthusiastic about all of the available ways to deliver content to consumers, and is encouraged by the ongoing appetite that consumers have shown for packaged media. The DEG expects that success to be further buoyed in 2008 by the continued advancement of high definition and other digital platforms.

      In the U.S. consumers spent $23.4 billion renting and buying DVDs according to the Hollywood-based trade group DEG with input from all major motion picture studios. Consumers spent nearly $300 million on high definition discs in its first complete year in market. Rental transactions for DVD were flat at $7.5 billion. Consumers spent $23.7 billion on the home entertainment category in calendar 2007, down two percent from the previous year.


U.S. CONSUMER HOME ENTERTAINMENT SPENDING (in billions)

YEAR
DVD SALES
DVD RENTAL
TOTAL CONSUMER SPENDING ON DVD
TOTAL CONSUMER SPENDING ON HOME VIDEO
(DVD & VHS - RENTAL & SELL THROUGH)
1999
$0.7
$0.1
$0.8
$12.8
2000
$1.9
$0.6
$2.5
$14.0
2001
$5.4
$1.4
$6.8
$16.8
2002
$8.7
 $2.9
$11.6
 $20.3
2003
 $11.6 $4.5 $16.1 $22.5
2004
 $15.5 $5.7 $21.2 $24.5
2005
 $16.3 $6.5 $22.8 $24.3
2006
 $16.6 $7.5 $24.1 $24.2
2007
$16
 $7.5 $23.4 $23.7
DEG: Digital Entertainment Group                                                  

     In the fourth quarter 2007, some 662 million DVDs shipped to retail according to figures compiled by Swicker & Associates on behalf of the DEG. More than 1.6 billion software units shipped throughout 2007, two percent more than the previous year, bringing the total number of units shipped since launch to nearly nine billion discs. These figures do not include high definition media discs.

DVD-VIDEO SOFTWARE SHIPMENTS IN U.S. & CANADA (in millions)

QUARTER
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
1st Quarter
N/A
3.3
11.1
29.0
69.2
120.1
231.7
 332.2
403.0
395.8
414.4
2nd Quarter
N/A
4.1
13.9
33.2
81.7
152.2
195.5
 316.8
369.1
346.1
297.1
3rd Quarter
2.3
5.9
29.0
42.7
75.9
153.3
214.6
 340.9
 347.9
343.3
314.7
4th Quarter
3.2
11.8
44.0
77.5
137.6
259.4
381.5
 528.4 
536.7 
571.4
662.2
YEARLY TOTAL
5.5
25.1
98.0
182.4
364.4
685.0
1023.3
 1,518.3
 1,656.9
1,656.6
1,688.4
TOTAL SHIPMENTS
(since launch)
 
30.6 
 128.6 
 311.0
675.4 
1,360.4 
2,383.7
 3,902.0
5,558.9
7,215.3
8,903.7
Figures compiled by Swicker & Associates on behalf of the DEG: Digital Entertainment Group

SALES OF HIGH DEFINITION MEDIA DEVICES EXCEEDS 4.5 MILLION UNITS
      High definition media devices – including set-top box and game consoles – are now available in some 10,000 storefronts in North America. These players sold through nearly 4.5 million units since launch in 2006, according to numbers compiled by the DEG with input from retail tracking sources.

      The high definition players – including Blu-ray Disc and HD DVD – are available at some 7,500 storefronts and are marketed from leading manufacturers. There are 29 models with prices from as low as $99 (manufacturers’ suggested retail price – street prices may vary).

DVD U.S. HOUSEHOLDS TOPS 90 MILLION
      According to figures compiled by the DEG based on data from Consumer Electronics Association (CEA) retailers and manufacturers, an estimated 33 million DVD players were sold to U.S. consumers in 2007 – virtually the same amount as the previous year. More than 12 million DVD players sold in the fourth quarter alone – slightly more than in the previous year.

      Since launch in spring 1997, some 230 million DVD players, including set-top and portable DVD players, Home-Theater-in-a-Box systems, TV/DVD and DVD/VCR combination players, have sold to consumers, bringing the number of DVD households to approximately to more than 90 million (adjusting for households with more than one player). The DEG estimates that 60 percent of DVD owners have more than one player.


U.S. DVD HARDWARE SALES (in millions)

QUARTER
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
1st Quarter
.030
.094
.358
1.350
2.220
3.565
4.858
 6.855
7.741
7.852
8.350
2nd Quarter
.079
.149
.611
1.435
2.404
3.750
5.506
 6.057
6.006
6.676
6.396
3rd Quarter
.077
.244
.880
1.550
2.537
4.740
6.470
 6.593
6.250
6.831
6.139
4th Quarter
.119
.459
1.701
5.542
9.501
13.058
16.9
 17.621
16.740
11.301
12.633
YEARLY
TOTAL
.305
.946
3.550
9.877
16.662
25.113
33.734
 37.125
36.737
32.66
33.518
TOTAL
(since launch)
 
 
 
 
 
 
 
  
 
 
229.042
*Includes set-top and portable DVD players, Home Theater in Box systems, TV/DVD and DVD/VCR combination players
DEG: Digital Entertainment Group

     DEG: The Digital Entertainment Group is a Los Angeles-based, industry-funded nonprofit corporation that advocates and promotes the many benefits associated with DVD while providing updated information regarding the format to both the media and the retail trade.  The DEG offers a forum for member companies to engage in ongoing discussions concerning various issues and opportunities, which relate to other new digital technologies that may emerge in the future.

     Regular members of the DEG are Anchor Bay Home Entertainment, D&M Holdings, Digeo, DTS Entertainment, Dolby Laboratories, HBO Video, Hewlett-Packard, Image Entertainment, JVC Company of America, Lionsgate, MGM Home Entertainment, Microsoft, New Line Home Entertainment, Panasonic Consumer Electronics, Paramount Home Entertainment, Philips Electronics, Pioneer Electronics (USA), Sony Electronics, Sony BMG Music Entertainment, Sony Pictures Home Entertainment, Thomson, Toshiba America Consumer Products, Twentieth Century Fox Home Entertainment, Universal Music Group, Universal Studios Home Entertainment, Walt Disney Studios Home Entertainment and Warner Home Video.

     Associate members are 3ality Digital, AGI Media, Arvato Digital Services, Ascent Media/Blink Digital, , Bertelsmann Direct North America, Blockbuster, Capgemini, CinemaNow, Cryptography Research, Deluxe Digital, Distribution Video & Audio, Ingram Entertainment, JVC Disc America, Kestrel Wireless, Macrovision, Memory-Tech, Netflix, Nielsen Entertainment, Panasonic North America, PaperFoam, Polar Frog Digital, RCDB, ScreenPlay, Simplay Labs, Sonic Solutions, Sony DADC, Technicolor, THX and Universal Operations Group.

     The DEG can be reached at 310-888-2201, via e-mail at getinfo@digitalentertainmentinfo.com or through its Web site at www.digitalentertainmentinfo.com.


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