The Video Software Dealers Association (VSDA) today released its 2003 Annual Report on the Home Entertainment Industry. The Annual Report provides comprehensive facts and analysis on DVD, VHS, and console video game sales and rentals.

Bo Andersen
VSDA President
"We produce this report to benchmark how well the home entertainment industry is doing, and I am pleased to note that this report shows that home video remains the American consumer's most popular way to view movies and that the industry is healthy and growing."

Some Highlights from the 2003 Annual Report

DVD Media and Hardware

• Within the span of 12 months, DVD console penetration rose 58% from 2001's 25 million households to 39 million by the end of 2002.
• Video consumers in the United States doubled their rental spending on DVDs from the prior year, pushing revenues to an unprecedented $2.9 billion in 2002.
• DVD sales, at $8.7 billion, were greater than the combined DVD and VHS rental revenue.
• High-definition DVDs are being pursued as the next wave of growth for DVD.

VHS Tapes and Hardware

• Despite being tagged as a "dying format," VCR hardware penetration rose by almost 4 million U.S. television households, to 97 million.
• U.S. consumers spent $3.4 billion buying prerecorded VHS tapes in 2002.
• Active VHS households rented on average 5.5 videocassettes per month during 2002.
• The prerecorded VHS will not disappear, but rather will evolve into a niche product.

Videogame Rentals and Sell-Through Markets

• 65 million people own at least one game console.
• Sales for console-based video game software increased 19.6% from 2001.
• Gamers spent $722 million renting video game software in 2002.
• The majority of console video game users prefer ultrarealism and sports competition.

Online Activity

• Experienced online shoppers tend to buy electronics, computers, software, videos, and DVDs.
• Nearly 50% of Best Buy's shoppers go to the Web site first before making a trip to the store.
• Broadband penetration is projected to grow to 20.6 million households by 2003.

Video-on-Demand

• Video-on-demand is projected to gross $293 million in sales during 2003.
• It is anticipated that video-on-demand households will reach 11.5 million in 2003.

In explaining the strength of the industry, Andersen said, "The basic driver of the growth of home video is the melding of the high-tech and portable DVD with the best entertainment in the world, the American motion picture."

Established in 1981, the Video Software Dealers Association (VSDA) is the not-for-profit international trade association for the $20 billion home entertainment industry. VSDA represents more than 1,500 companies throughout the United States, Canada, and a dozen other countries.