Current Market

Australian DVD Market Background

The Australian Home Entertainment rental market is one of the most competitive in the world in terms of store numbers, pricing, product copy depth and customer service. In reality, the Australian rental market needs rationalisation as there are too many stores chasing the available business. Pinefilm Entertainment Pty Ltd believes it is well positioned to take advantage of market opportunities in this environment.

The explosive growth in DVD retail, coupled with a significant rise in piracy, has resulted in a significant industry shift away from movie and game rental in the Australian market. In addition, Australian customers now have more choices than ever before outside of the rental DVD store to satisfy their entertainment needs internet, games and enhanced pay TV offering, as well as so called New Technology.

In Australia Video Ezy is market leader in the movie rental market with an estimated 32% to 34% market share, followed by Blockbuster who has an estimated 28% to 30% market share. Network Video has an estimated 11% market share and Civic Video have an estimated 10% share. Horizon One Entertainment Pty Ltd believes that Australia still has higher revenues on a per store average than the rest of the world.

Market Size - Rental

Australian DVD Rental Market Share
 
2001
2002
2003
2004
2005
Jan-Jul 2006
Value (A$m)
213
228
237
222
167
94
Volume (m)
5.6
6.9
8.5
9.6
7.9
5
No of Releases
435
470
821
N/A
N/A
N/A
Average Unit Cost
A$38.88
A$32.75
A$27.88
A$22.70
A$21.14
A$18.80

The size of the rental market has been in steady decline with the studio wholesale shipments to the rental industry being down by 22% from A$213 million in 2001 to A$167 million in 2005

The size of the rental market has been in steady decline with the studio wholesale shipments to the rental industry being down by 22% from A$213 million in 2001 to A$167 million in 2005.

Rental Channel (Wholesale) Statistics
DVD, BLU RAY, HD, UMD & VHS, (All formats) Combined
Calendar Year
$
Units
Financial Year
$
Units
2006
$175,403,203
9,667,159
2006-07
$182,258,051
10,332,213
2007
$211,398,008
13,176,655
 2007-2008 $209,163,063 13,416,258

Market Size - Retail

Australian DVD Retail Market Size
 
2001
2002
2003
2004
2005
Jan-Jul 2006
Value (A$m)
377
598
742
903
883
399
Volume (m)
21.7
33.4
41.2
53
57
28
Average Unit Cost
A$17.37
A$17.90
A$18.00
A$17.04
A$15.49
A$14.25

There has been significant growth in the size of the retail market from A$377 million in 2001 to A$883 million in 2005 as a result of some studios adopting a “direct to retail” strategy and removing the rental window.

Retail Channel (Wholesale) Statistics
DVD, BLU RAY, HD, UMD & VHS, (All formats) Combined
Calendar Year
$
Units
Financial Year
$
Units
2006
$1,017,892,331
65,233,575
2006-07
$1,061,227,005
69,599,424
2007
$1,135,952,909
82,209,931
 2007-2008 $1,059,842,856 85,420,405