• DVD Services revenues increased in the third quarter of 2015, driven by growth in combined Standard Definition DVD ("SD-DVD") and Blu-ray^TM disc volumes of more than 2% compared to the third quarter of 2014. Standard Definition DVD volumes were flat year-on-year, supported by a strong slate of studio new releases in the third quarter of 2015, as well as by the impact of selected new customer additions. Blu-ray^TM disc volumes were up c.11%, due to the same factors as SD-DVD, and the positive impact of ongoing growth in Blu-ray^TM Xbox One games volumes. Total Games volumes were affected by further decline in SD-DVD games volumes for prior generation Xbox. As expected, DVD Services experienced strong improvement in year-on-year and sequential quarterly volume performance in the quarter, which reconfirms ongoing consumer demand for packaged media when compelling content is available.

     Selected key Theatrical titles produced in the third quarter of 2015 included Avengers 2: Age of Ultron (Disney/Marvel), Inside Out (Disney), Jurassic World (Universal), Furious 7 (Universal), Mad Max: Fury Road (Warner), as well as Terminator Genisys (Paramount). Key Games titles produced in the quarter included FIFA 16 (Electronic Arts) and Call of Duty: Black Ops III (Activision).

Volume Data for DVD Services

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Connected Home revenues amounted to €332 million in the third quarter of 2015, down 10% at current currency compared to the third quarter of 2014. This performance reflected lower total product volumes of 7.7 million units (-14.2%) in the quarter, with a weak level of activity in North America, partially offset by an improvement in overall product mix across most regions, with the exception of Brazil.

As expected, the soft revenue trend experienced by the Connected Home segment in the second quarter of 2015 persisted during the third quarter, almost entirely due to North America, where customer orders continued to be affected by pending industry consolidation, and in Brazil, due to softening macroeconomic conditions. Connected Home recorded however double-digit revenue growth in Europe, Middle-East and Africa and in Asia-Pacific, driven notably by the ramp-up of new higher-end devices during the period.

Technicolor expects overall sales growth to resume strongly in the fourth quarter of 2015, resulting from a number of new awards and customer wins, including high-end products. As a result, Connected Home revenues are expected to grow year-on-year materially faster than the market on a full year basis (at current currency).

Q3 2015 Regional Highlights

• In North America, revenues decreased significantly in the third quarter of 2015 compared to the third quarter of 2014. Product deliveries in the period were affected by ongoing cautious customer approach towards orders and inventory management related to pending industry consolidation, particularly in the Satellite segment, as well as by the phasing-out in the first quarter of 2015 of a Cable device that was shipped in large volumes in the third quarter of 2014. Overall product mix improved however strongly year-on-year, driven mainly by an increased contribution of higher-end Cable devices in the sales mix.
• In Latin America, revenues declined in the third quarter of 2015 compared to the third quarter of 2014, reflecting a drop in product shipments, after four consecutive quarters of year-on-year growth. Product deliveries in the period were primarily affected by tougher macroeconomic conditions in Brazil, as reflected by the devaluation of the Brazilian real against the US$, which led to high inventory levels.
• In Europe, Middle East and Africa, revenues were up double-digit in the third quarter of 2015 compared to the third quarter of 2014, driven by stronger product shipments and significantly improved overall product mix. Connected Home benefited from the ramp-up of a new OTT set top box introduced at a key French customer, a device that the Group has started to ship across additional international markets. The segment's performance was also supported by higher deliveries of OTT and broadband devices to Telecom customers, as well as by increased volumes of Cable gateways, driven by Western Europe.
• In Asia-Pacific, revenues rose significantly in the third quarter of 2015 compared to the third quarter of 2014, as a result of a strong double-digit increase in product shipments and a material improvement in overall product mix. Volume growth in the period reflected a rebound in set top box shipments to Indian customers as the digitization program has resumed, as well as higher deliveries of Cable and Telecom broadband devices, notably in China.

Volume Data for Connected Home

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