Chicago (IL) – The Entertainment Merchants Association (EMA) released its 2008 annual report with a wealth of data revealing the most trends in TV, home video and video gaming segments. The flood of data reveals that video game publishers are closing in on the revenue of stagnating home video sales, Blu-ray looked like the losing HD format in 2006, but was able to reverse the trend thanks to the PS3 in 2007, Microsoft has sold 316,000 now useless HD DVD add-ons for its Xbox 360 console and the average person now spends $310 on movie and game entertainment per year.
The annual report of the EMA is among the most comprehensive and perhaps confusing reports on the state of the entertainment industry of its kind. The 32-page document lists several hundred revenue and unit sales numbers from different market research firms in an effort to provide an impression of entertainment industry trends.
In general, we now know that most of our entertainment content budget goes to home video. Of the total $310 the average person is spending, $116 goes to home videos, $56 to consumer Internet content, $52 to music, $37 to the box office, $36 to video games and $13 to mobile content.
Let’s look a bit closer how the movie industry, TV and playback devices as well as the video game segment did in 2007.
According to the EMA, 49% of our movie budget goes to home video, 25% cable TV, 23% to the box office and 3% to on-demand content. Consumers spent $24.1 billion on home videos in 2007 ($16.5 billion in buy-to-own and 8.2 billion in rentals), which is down from $24.7 billion last year and down from a peak of $25.5 billion in 2004. The EMA believes that this trend will continue for some years with revenues declining to $23.6 billion in 2008 and $23.3 billion in 2009.
A total of 12,177 DVDs (including HD media, and all types of content, including TV shows) were released in 2007, which is down 13,637 in 2006.
300 movies were released on Blu-ray, while 234 movies became available on HD DVD. The EMA said that 800 different titles were available on either HD DVD or Blu-ray at the end of 2007. Nearly nine million high-def discs were sold during the year, raking in revenues of $260 million. Blu-ray discs accounted for 67% (about $170 million) of all HD video sales (40% in 2006), despite the fact that these movies were more expensive than HD DVD titles. According to the EMA, the average Blu-ray title was priced at $33.03, while HD DVD movies cost an average of $31.77. Contrary to common belief, these prices were not much higher than new theatrical releases on DVD, which were priced at an average of $27.13, the EMA said. According to the industry organization, the Playstation 3 may have been the decisive factor to provide Blu-ray with the necessary edge to win over the majority of high-def movie sales.
Digital delivery of movies is still a minor factor in the equation and hit $1 billion for video-on-demand and pay-per-view programming delivered via Internet, cable and satellite seems paltry. $123 million were spent on spent on Internet downloads.
The top-selling DVD titles of 2007 were Happy Feet, Transformers and Pirates of the Caribbean 3 – At World’s End. The top-selling HD titles were 300 (Blu-ray), Transformers (HD DVD) and Pirates of the Caribbean 3 – At World’s End (Blu-ray).
It is interesting to note that movie studios are bringing their movies much faster to the home video market than ever before. On average DVDs are following the theatrical release with a distance of 126 days, down from 129 in 2006 and down from 171 days just five years ago.
Six major publishers currently control almost 85% of the home video market – Warner holds 18.8%, followed by Fox (15.3%), Sony (13.5%), Paramount (13.4%), Disney (13.1%) and Universal (10.7%).
Read on the next page HDTVs and DVD players, video games
HDTVs and DVD players
HDTV sales rose to 20.7 million units in 2007, bringing the total installed base to 46.4 million in the U.S. (34% of households). The EMA noted that only 44% of those who own a HDTV actually watch HD programming and 22% believe to watch HD programming, while they in fact do not. The HDTV installed base is still well behind the total installed base of TVs, which was 112.4 million at the end of 2007.
Over the course of the year, 33 million DVD players were sold, bringing the total to 87.3 million console DVD players in the U.S. in 2007. There were also 48.5 million PC DVD players, 29.5 million DVD players in video game systems, 27.2 million portable DVD players and 25.2 million DVRs. 60% of DVD owners are estimated to have more than one DVD player. Almost 4.5 million HD players were sold in 2006 and 2007 in the U.S.
The PS3 is widely believed to remain the primary driver behind Blu-ray sales, as 87% of PS3 owners said they watch Blu-ray movies on their console. The fact that Microsoft decided not to integrate a HD DVD drive into the Xbox 360, may have sealed the format’s fate: The EMA said that Microsoft sold 316,000 HD DVD add-ons for the Xbox 360, which is marginal when compared to U.S. PS3 sales, which were close to 3 million by the end at 2007.
The EMA believes that the PS3 will remain the main force behind Blu-ray disc sales until 2009, when standalone Blu-ray players are expected to outpace the sales volume of the PS3. Market research indicates that 100 – 130 million homes worldwide will own at least one Blu-ray player by 2012.
Annual sales of all Blu-ray devices are expected to reach 57.4 million units by that time. The largest market will be Europe with 26.4 million, followed by the U.S. with 22.6 million and Japan with 8.4 million, according to the EMA.
The 2007 video game software market brought in $17.94 billion in console software sales as well as $910.7 million in PC game sales worldwide. Overall, 268 million game boxes were purchased by video gamers in 2007.
The most successful games of the year were Halo 3 (Xbox 360), which sold 4.8 million units, followed by Wii Play (Wii) with 4.1 million and Call of Duty 4 (Xbox 360) with 3.0 million. The PS3 had no title in the top 10 of the year.
It is interesting to note that he average gamer is much older than most may think – 33 years. The EMA said that 48% of gamers are 18-49 years of age, 28% 18 years or younger and 24% are older than 50.
In terms of an installed base, Sony’s PS2 remained the most popular game platform in the U.S. with an estimated 41.12 million units being actively used. Nintendo’s DS follows with 17.65 million units, the PSP with 10.47 million, the Xbox 360 with 9.15 million, the Wii with 7.36 million and the PS3 with 3.25 million.
The EMA said that Nintendo accounted for 52% of all video game hardware systems sold in the U.S. in 2007 (8.5 million DS handhelds and 6.23 million Wiis). Microsoft sold 4.62 million Xbox 360s and Sony sold 2.56 million Playstation 3s, 3.97 million Playstation 2s and 3.82 million PSPs.
For 2007, overall hardware sales totaled $7.04 billion, which represented a 54% increase over 2006. The driving force was console hardware sales which were up 73% to $5.12 billion for the year.