Unwrapping Entertainment for the Holidays - Music and Video Remain Popular Gifts, Says NPD.

Even with digital options available, 8 in 10 music consumers plan to purchase CDs as gifts;

Gift recipients can expect fewer DVDs under the tree this year, according to The NPD Group's holiday consumer survey

PORT WASHINGTON, N.Y. -- According to The NPD Group, a leading consumer and retail information company, music gifts will be as popular among gift givers this year as they were last year, although gift cards that allow people to purchase CDs and digital music will play a larger role at retail this year - both online and off. When it comes to movies, though, gift recipients may see fewer DVDs under the tree this year compared to last year.

"Entertainment gifts tend to be popular year over year, due to their general affordability and stocking-stuffer value," said Russ Crupnick, vice president and senior industry analyst for The NPD Group, "but fewer people anticipate purchasing DVDs again this year, even as music purchases remain steady."

Nearly one-third of gift givers expect to purchase music for others during the holidays, which is the same rate NPD noted in the prior two years; however, the nature of this purchasing is undergoing change. According to Crupnick, "15 percent of 18- to 24-year-olds expect to buy music gift cards from digital retailers such as Apple's iTunes Music Store or Napster. The rise in popularity of digital music as gifts further challenges the CD, which is also under pressure from rampant copying and sharing."

When it comes to video, however, the holiday expectations aren't as bright as they are for music. Although home video has been an incredibly successful category over the last few years, the market is maturing and sales growth is slowing. The effects of this market decline is also evident in the results of NPD's recent Holiday Shopping Survey, which reports that just over a third (36 percent) of holiday shoppers intend to buy DVDs as holiday gifts this year, versus 40 percent who purchased them last year and 45 percent in 2004. The numbers are slightly stronger for younger consumers age 18 to 34 (55 percent) and households with children (51 percent).

"The good news on the video front is that there are several high-powered theatrical releases coming out prior to the holidays, such as 'Pirates of the Caribbean, Dead Man's Chest,' 'Mission Impossible III,' 'The DaVinci Code' and 'Ice Age,'" Crupnick noted. "The growing popularity of TV content, including new releases from 'The Sopranos,' 'Seinfeld,' and 'Family Guy,' is also on deck for the holidays, so there's still plenty of potential for growth, if the category is promoted and merchandised appropriately."

For more information about The NPD Group's Holiday Survey 2006, visit http://www.npd.com/lps/holiday_survey/.

Sources: The NPD Holiday Survey was fielded September 12 to September 19, 2006. The findings presented here are based on information from 1,823 completed interviews of NPD's online consumer panel. Additional data is derived from the following NPD data subscription services: MusicWatch, MusicWatch Digital, Videowatch and Videowatch Digital.

About The NPD Group, Inc.

The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, visit http://www.npd.com/.