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European DVD sales dip 5%

Rental market expected to fall by 7%

ROME — The European DVD market is expected to see its second straight yearly decline, falling to E10 billion ($13 billion) in 2006, as discounting continues to take its toll and consumers begin a shift to new technologies, a study issued Wednesday said.

In monetary terms, the European retail market for DVDs is expected to fall 5% year on year and the rental market by 7%, according to London-based media consultancy Screen Digest. Unit sales will not fare much better, according to the report, as the number of DVDs sold in 2006 will level off after several strong years.

Amid the overall downturn, which began in 2005, studios and retailers have begun to cut back on promotional pricing. Screen Digest forecasts prices will fall an average of just 5% in 2006, compared with an annual average decline of 12% between 2001 and 2005.

Screen Digest believes the European DVD market has hit a classic saturation point and that growth will level off for a few years before new technologies — namely, video-on-demand and, later, Blu-ray and HD- DVD discs — begin to take hold.

“Despite the fact that volume sales continue to climb, the DVD market is running out of steam as falling prices depress spending. However, the arrival of the high-def video formats is expected to increase average prices, and consequently, to boost consumer spending on retail video,” said Screen Digest analyst Marie Bloomfield.

Some bright spots identified were the nascent download-to-own and online rental markets. On a regional basis, Central Europe and Russia are viewed as high growth areas if piracy can be controlled.

The report singled out Russia as a particularly tenuous market. While growth rates are very high there, retail prices are plummeting faster than anywhere else in Europe, declining 32% in the past year to bring the average DVD retail price to $8.40.