LONDON –The U.K. video retail market rose by 12% in 2004 according to British Video Assn. figures.

The BVA’s first reports, released Thursday, reveal that 233.5 million units were sold in 2004 and 16 titles sold more than a million copies. Only nine titles topped 1 million units sold in 2003.

Although a number of big releases such as “Shrek 2” and “Spider-Man 2” failed to meet industry expectations, December biz rose by 10% on the previous year. The fast-selling DVD of the first series of Brit TV comedy “Little Britain” proved to be a seasonal favorite.

Leading the charge

Despite illegal bootlegging, DVD sales led the charge with a 36% growth in 2004. Household DVD penetration is estimated to have passed 60% in 2004.

But piracy does appear to be taking its toll on DVD growth. The third “Harry Potter” pic sold 770,000 units in its first two days on release in November, a big drop from the 1.6 million sold by “Harry Potter and the Chamber of Secrets.” Retailers blame illegal replication plants banging out fakes, while the BVA suggests pricing policy is as much a factor.

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“Many industries would be extremely envious of an annual growth rate of 12%, and these results are better than we expected in December,” said BVA director general Lavinia Carey. “The video market was expected to start maturing at some stage, producing slower growth rates than we’ve seen in the past few years.”

VHS hangs in there

VHS sales were unable to fend off the relentless DVD assault and dipped 41% in 2004. Despite the sizeable drop-off, there are still some signs of life for the clunky VHS. Mike Brown, BVA marketing consultant, opines that “although VHS is clearly not a growth market, the replacement market for VHS recorders remains significant. In 2003, 4.7 million VHS hardware products were sold in the U.K.”

Independent retailers such as London’s Video City concur with Brown on the surprising buoyancy of the VHS market. Video City’s Simon Brzeskwinski said, “Customers still need VHS so they are able to watch movies such as ‘Before Sunrise,’ ‘The Breakfast Club,’ ‘Clerks,’ ‘Burned by the Sun’ and ‘Romuald et Juliette,’ which are still unavailable on DVD.”

But do not expect VHS to make a comeback. On Nov. 22 Dixons, the U.K.’s largest electrical goods chain, announced its intention to stop selling VHS recorders after 26 years in the biz.