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DVD Entertainment Sales to Rebound in 2009

The home video software industry � currently stagnating � will rebound in 2009 when next-generation high-definition DVDs finally catch stride, forecasts Kagan Research.

Introduction of a new video format would ordinarily be a catalyst for a more immediate boom, but consumers are frozen by two dueling and incompatible next-generation hi-definition DVD platforms, notes Kagan analyst Wade Holden. A software revenue boom results from purchases and rentals of old movies in the new format.

"We forecast that it won't be until 2008 until one format wins out or manufacturers begin to make dual format players," he adds. "That timeline means video software gains significant momentum from 2009-12." Toshiba-led HD DVD format players have just launched and Sony-driven Blu-Ray will be introduced later this year.

The U.S. home video software business contracted 0.9 percent in 2005 at the consumer spend level, which represents the sector's first down year since the standard DVD format was introduced in the U.S. in 1997. Currently, there are three generations of video software in the U.S. market: the fast-fading VHS videocassette, the standard definition DVD and next-generation high-definition DVD.

Looking at a 2006-2015 forecast period, Kagan sees sell-through � low priced titles tailored for sale to consumers � to continue to eclipse rental in all formats. "Rental is still a hefty portion of business, but sell-through is more lucrative for the Hollywood film companies so it gets more of a push," says Holden. "The highest revenues sell-through ever achieved in the VHS videotape era totaled $8.5 billion in 1998. DVD sell-through in 2005 was almost double that at $16 billion"

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