DVDs Major Players in 2002

Hollywood’s DVD story line played out even more dramatically in 2002 than expected.

Figures compiled by accounting firm Ernst & Young for the film industry’s DVD Entertainment Group indicate that sales and rentals of DVDs soared 71% to $11.6 billion last year, from $6.8 billion a year earlier.

The industry had been heralding a banner year. But the final tally, released Thursday at the International Consumer Electronics Show in Las Vegas, indicates that DVD revenue growth has continued to accelerate in recent months.

“It continues to swell and hasn’t subsided,” said Amy Jo Donner, executive director of the DVD group. “The fact it has not slowed yet is stunning because there are only so many households.”

The surge in DVD revenue pushed the domestic home video business to $20.3 billion. DVDs account for 57% of the total; the dwindling videocassette business makes up the rest.

Home video long has dwarfed the domestic box office and now accounts for more than twice the $9.3 billion spent last year on movie tickets.

Powering the increase was the sale to consumers of such hits as “Spider-Man,” “Monsters, Inc.,” “Ice Age,” “Minority Report” and “The Lord of the Rings: The Fellowship of the Ring.” Consumers spent $8.7 billion buying DVDs in stores, up 61% from a year earlier, and rented an additional $2.9 billion in discs.

Studios increasingly have pushed the sale of DVDs to consumers, especially in mass-merchandise stores such as Wal-Mart and Target, or in electronics stores such as Best Buy. DVDs cost less to produce than videocassettes and have proved to be a lucrative sale item.

In contrast, the videocassette business has been heavily weighted toward rentals.

The DVD group said firms shipped 685 million DVDs last year, nearly twice the number shipped in 2001 and more than the number shipped in the previous five years combined.

More than 40 million households have DVD players, the group said.