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An increase in the volume of sales of unbranded DVD players and the parallel importing of DVD players into Mexico caused the number of DVD enabled households to rise more sharply than anticipated during 2005 and first half 2006. Screen Digest figures have been amended to reflect this development, raising the number of DVD households in 2005 to 8m, or DVD player penetration of 37.7%. Some industry sources have suggested that DVD penetration could exceed 50% by the end of 2006, however Screen Digest is currently forecasting a figure of 10.5m households or 47.9% by the end of the year.


The number of DVD units sold in 2005 - 22m - was roughly in line with Screen Digest's estimate of 20m units, and reflected an incredible 130% growth in volume. This expansion reflected the strong performance of budget DVD lines, new to the Mexican market, which also contributed to a 20% decline (in local currency terms) in the average consumer price to NP135 ($12.40). However, our research indicates that this growth is not sustainable and we anticipate that DVD sales will rise by less than 10% in 2006, to 24m units. Average consumer prices also fell in the first half of 2006, with budget lines accounting for as many as half of all unit sales and a decline in new release pricing. As a result, we anticipate that average prices in 2006 will be around NP125 ($11.47).

The retail VHS sector has come to an even more dramatic halt in Mexico than in Europe and the US, and now accounts for less than 3% of trade level video shipments, with studios and wholesalers clearing through stock of the format. Based on feedback from the industry we anticipate total 2006 sales of no more than 700,000 units. Many distributors have already ceased to release on VHS and trade level shipments are expected to stop altogether by the end of this year. Consumer sales of the VHS format are forecast to continue until 2008 with consumers taking advantage of the low average sale price generated by the clearance activity.