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SANTA ANA, Calif. - The explosion of DVD in the consumer marketplace fueled a $1 billion increase in Wal-Mart's home video software business in 2001 and helped Blockbuster Video maintain its position as the nation's single-largest retailer of home video, with $3.6 billion in domestic home video revenues, according to Video Store Magazine's annual "Top 100" ranking and analysis of the home video retail industry, published in its April 28-May 4 issue.
Revenue from the rental and sale of VHS and DVD rose to $20.8 billion in the United States in 2001, driven by the popularity and growth of DVD. Wal-Mart capitalized on the DVD market and more than doubled its sales of DVD from $375 million in 2000 to $900 million in 2001 (excluding Sam's Club stores), according to Video Store Magazine market research estimates.
Wal-Mart was the leader in combined sales of DVD and VHS home video, with 28 percent of the $10.78 billion sellthrough business, or a little more than $3 billion. Wal-Mart's combined video revenue in 2000 was $1.9 billion. A distant second was Target stores, with 9 percent of the sellthrough business.
"Wal-Mart achieved this growth through a number of strategic ploys, including the placement of DVD discount bins in high-traffic aisles and aggressive stocking of DVD catalog and hits," said Judith McCourt, market research director for Video Store Magazine, in introducing the magazine's annual ranking of retailers covering specialty stores, mass merchants and other retail segments selling home video software.
DVD helped drive a 6 percent growth in home video rentals in 2001, to $10.03 billion -- the first such increase for the industry in two years, according to Video Store Magazine market research. Blockbuster held on to its overall leadership position in the home video business largely as a result of its continued dominance in the rental business, garnering a 33 percent share of all home video DVD/VHS rental revenue in 2001, for an estimated $3.3 billion of its domestic revenue (not including revenue from its franchise, video game and other ancillary revenue).
Late fees accounted for an estimated 13.4 percent of its gross revenue for the year, which is within the industry average.
"Blockbuster responded to DVD's surging popularity with a massive remerchandising of its stores to remove about one quarter of its VHS inventory by year's end and focus on DVD ... that resulted in DVD transactions rising 160 percent in 2001," said Kurt Indvik, editor-in-chief, in analyzing Blockbuster for Video Store Magazine's Top 100 issue.