- Rental disc shipments increased year-on-year ending the three-year decline in the sector
- Rental store base has stabilised at 6,000 - half the 2006 number
- Growth is likely to be short lived, but future decline will now be slower
Screen Digest has updated its DVD and Blu-ray Disc (BD) rental forecasts for Brazil on the basis of year-to-end July shipment data from the UBV and feedback from industry sources.
The number of DVDs shipped to rental outlets in Brazil in the first seven months of the year increased to 2.1m, up 3.8% compared to the same period in 2009. The increase represents a reversal of the three-year decline seen in the market. Key titles Avatar and Disney's Alice in Wonderland have been credited with driving rental shipments early in the year. Meanwhile the number of BDs shipped for rental increased hugely over the same time period - up over 1,200 per cent - albeit from a very small base, to 100,000 units.
Screen Digest forecasts that a total of 4.0m discs will have been shipped for rental by the end of 2010, 7.4 per cent higher than in 2009. However, by 2014 the number of discs shipped for rental will have fallen to 2.2m with BD accounting for 12% of the total.
Consumer level rental forecasts for 2010 have also been increased to reflect feedback and the increase in shipments, particularly on BD. Screen Digest rental forecasts to 2014 have been amended to reflect a slowing of the overall rental decline.
Until 2009 rental was the dominant form of home video spending in Brazil. International football (soccer) in the form of the FIFA World Cup tournament in 2006 spurred many consumers to purchase hardware which was subsequently used for home entertainment, initially though video rental. However consumers soon began shifting their spending towards video purchasing rather than rental. This trend was further assisted by increasing levels of price-driven promotions on DVD, sparked by local content owners but later echoed by the major studios.
The shift in consumer spending from retail to rental after 2006 and increased competition for lower end consumers from piracy resulted in a number of changes in the retail store base. A large number of independent rental stores closed down, there was increased consolidation among the remaining small operators and a notable reduction in the amount of store space given over to DVD rental in the non-specialists. As a result, the number of rental outlets in Brazil halved from 1,200 in 2006 to just 6,000 by year end 2009. Since then, however, the rental store base has stabilised and by mid 2010 our research indicated a stable 6,000 strong rental store base.
As mentioned above, both Avatar and Alice helped drive rental growth in the first half of 2010. However, Screen Digest expects rental growth to be maintained through the remainder of the year. Football-related hardware purchasing (2010 was, of course, another FIFA World Cup year) will drive growth through the second half as new video-enabled homes experiment with their new video playback systems.
The previous World Cup sparked a peak DVD in rentals followed by a gradual shift to retail purchasing and Screen Digest expects to see a similar trend this time round with both DVD and BD benefiting. Therefore, whilst rental growth may extend into early 2011 the overall trend of rental decline and retail growth in Brazil will return in 2011.
The stabilisation in the rental store base will slow the decline in consumer level rental spending and Screen Digest anticipates that by 2014 (the next FIFA World Cup) DVD and BD rental will still account for R$310m ($155m), a third of overall consumer spending on packaged video in Brazil.