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DVDs pass VHS in rental revenues

SHARE DVDs pass VHS in rental revenues

Fueled by robust rentals for the suspense-thriller "The Ring," DVD rental revenues surpassed VHS rental revenues in a single week for the first time ever, according to statistics released by the Video Dealers Software Association.

The gap between DVD and VHS rentals has been closing for several months, but it wasn't until the week ending March 16 that revenues for the newer format finally edged ahead by reaching $80 million in one week vs. $78 million for VHS.

"We're real excited about this," said VSDA spokesman Sean Bersell. "This shows the tremendous impact of DVD on the home-video industry. It continues to exceed everyone's expectations and continues to drive the growth of the home-video industry."

While DVD rental revenue surpassed that of VHS, more tapes than discs were actually rented by a 54 percent to 46 percent margin. The reason for the discrepancy is that the average rental price for a DVD is $3.07 while VHS titles have an average rental price of $2.54.

DVD players are now in more than 40 million households nationwide, and shipments of DVD titles hit 685 million units last year, a leap from 5.5 million units just six years ago.

DreamWorks' "The Ring," which was a surprise box office sensation last fall due to spectacular word of mouth, has been the top DVD and VHS rental title for the past two weeks, according to statistics compiled by the VSDA.

Rounding out the top five on DVD were the Eddie Murphy-Owen Wilson comedy "I Spy," the Tom Hanks-Paul Newman drama "Road to Perdition," the thriller "Swimfan" and the Robin Williams vehicle "One Hour Photo." Top VHS rentals were identical but in slightly different order.

Bersell said the strong DVD rental activity has resulted in an overall boost that has seen video-rental revenue up by 10 percent as the weekend of March 9 compared with the first nine weeks of last year.

"What this demonstrates is that DVD has captured the consumers' imagination not only as a product purchase but also as a product to rent," said Bersell. "DVD is not spelling the end of the video-rental industry. Rather, it is reinvigorating the video-rental industry as it did for the purchasing of home videos."

Indeed, the biggest revolution in the home-video industry over the past 12 months has been the surge in the purchasing DVD movies by consumers, especially of such blockbuster titles as "Spider-Man," "Star Wars: Episode II — Attack of the Clones" and "Harry Potter and the Chamber of Secrets."

"With the big box office hits, you will have people who will want to own them," said Randy Hargrove, spokesman for Blockbuster, Inc., the nation's largest video-store chain. "But there are lots of other titles they will maybe just want to rent once."

Blockbuster transformed its stores last year in order to dramatically increase its inventory of DVD film titles.

People have been transitioning from VHS tape to DVD at a rapid pace in the past year or so. The DVD Entertainment Group, a Los Angeles-based industry-funded nonprofit corporation, estimates that by the end of this year, there will be at least one DVD player in half of the homes in the United States.

With more than 250 different DVD player models marketed under 60 different brands, the format has become the primary focus of the home-video industry. Boosting the sales of DVD players has been the decrease in prices with some models selling for as little as $50 while a wider variety are available for $100 or less.

"We're not surprised to see that customers are renting more DVDs," Hargrove said. "You had a lot of people who got DVD players over the holidays."