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TV Program Shift from DVD to Download

A flood of TV programs in the DVD format is blamed for crowding out theatrical titles in video retailing. But that torrent of programs hogging shelf space isn't a rising tide anymore, forecasts Kagan Research.

This year is expected to be a peak for total revenue from DVD sales of TV programs, with $2.71 billion in worldwide revenue at the consumer-spend level forecast by Kagan Research. Consumers are switching from fixed media such as DVDs to on-demand electronic downloads," notes Bridget McCullough, associate analyst with Kagan Research. "They are becoming more and more comfortable with the concept of storing their video entertainment on a hard drive as opposed to on a shelf."

The plateau in 2006 will end a sharp run-up. In 2000, TV program sales on DVDs generated just $570 million. After 2006, Kagan Research forecasts the category to slide slightly through 2012.

Kagan Research sees TV programs representing a shrinking slice of global video/DVD total revenue. TV programs are forecast to account for 6.7 percent of global consumer spending on video/DVD this year, but the category could decline to 4.9 percent of total video by 2012.

Looking at shifting economics, downloads figure to be less lucrative on a per-transaction basis for program distributors and studios. Distributors take an estimated 80 percent of consumer spend on DVD sales in the sell-through category (TV programs are not strong rental titles), while they only get an estimated 60-70 percent of consumer spend from downloads.

But downloads are generating growing volume. Kagan forecasts pay-per-view and video-on-demand TV revenue on a global basis for Hollywood distributors (including feature films) will soar 276 percent from 2004-2012, and rise from 1.5 percent of total distributor-level revenue to 3.8 percent in that eight-year period.

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