NPD Group Report Shows Correlation on CD-DVD-Game Sales

PORT WASHINGTON, NY - May 19, 2005 - Licensing helps drive entertainment sales; Stressed consumers enjoy one-stop shopping

The multitude of entertainment options in the marketplace means increased competition for the consumer's entertainment dollar, according to The NPD Group's recent study, the Cross-Entertainment Shopping Report. The report highlighted the fierce competition, but noted an increasing inter-dependence, across the various entertainment categories.

The Cross-Entertainment Shopping Report was designed to help marketers and retailers plan for the critical 2005 holiday season armed with the hindsight of 2004 purchase patterns. NPD revealed that DVDs were the most popular entertainment product category, with 42 percent of US population age 13 and older purchasing a video in November and December of last year. DVDs were closely followed by toys (37 percent), music CDs (36 percent), gift cards (30 percent) and videogames (20 percent) as the most popular items purchased over the holiday season.

Sibling Rivalry: That's Entertainment
More than half of entertainment product purchasers crossed categories during the 2004 holiday season. For example, 62 percent of music buyers also purchased a video, and 62 percent of videogame buyers bought a traditional toy.

"The challenge for marketers is to understand how to leverage the consumer's desire for entertainment alternatives, while not cannibalizing their core business," said Anita Frazier, NPD entertainment industry analyst. "The entertainment industry sectors each need to understand where cross-promotion and in-store merchandising is synergistic, so that they can optimize brand equity and register ring."

Did You Get the Number of that License?
If last holiday is any indication, NPD expects that licensing will continue to soar in 2005, and beyond. "Consumers are clearly playing back the licensing message," said Frazier.

NPD reported that 79 percent of consumers who bought a movie soundtrack did so after seeing the movie; 43 percent reported buying a toy that was featured in a movie; and 33 percent of videogame buyers were motivated to buy a game that was represented in a movie; and 20 percent of videogame buyers bought music that was featured in the game.

"Music companies are scrambling to get placement in a movie or videogame, and this validates those marketing tactics," Frazier noted. "Teens were especially responsive to buying music from games, and that's a terrific vehicle for labels to promote new artists or reconnect with consumers who have been trading instead of buying."

One-Stop Shopping - Shirts, Pajamas . . . and CDs?
Though it may be strange to think about entertainment in the context of shirts and pajamas, consumers appear to be thinking that way when they shop, according to the Cross-Entertainment Shopping Report. Mass merchandisers are top of mind when consumers think about purchasing entertainment.

"Low prices, convenience and selection are naturally important to shoppers, but what really comes through during the holidays is the value of one-stop shopping," according to Frazier. "Consumers are on a mission to save time and they know that mass merchandisers offer an efficient shopping model. It's one reason we saw online merchandisers benefit during the holidays."

To counteract the one-stop-shopping consumer mentality, brick-and-mortar electronics and specialty retailers must position themselves among consumers as a "destination" shopping alternative. Their primary challenge is to market their retail destinations as the place where consumers will find superior service, deep catalogs and value-based pricing.

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About the Cross-Entertainment Shopping Report
The Cross-Entertainment Shopping Report offers guidance on consumer cross-category tastes, shopping behavior and demographics to enhance development of successful merchandising, co-promotion, and marketing plans. It is designed to be a useful tool for both manufacturers and retailers, as they ramp-up planning for the 2005 holiday season. Each January, NPD collects detailed information about consumers' shopping and purchase habits during the holiday season. NPD interviews approximately 10,000 individuals age 13+ from its online consumer panel of more than 2.5 million registered members. The report is written by NPD's entertainment industry experts, focusing on trends that had an impact on the home video, music and video games markets during the holiday season.

About The NPD Group, Inc.
Since 1967 The NPD Group has provided reliable and comprehensive sales and marketing information for a wide range of industries. Today more than 1,300 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels and competition in order to help guide their business. Information from The NPD Group is available for the following major vertical sectors: apparel, appliances, automotive, beauty, cellular, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, music, software, travel, toys and video games. For more information visit http://www.npd.com