DEG Year-end 2015 spending chart (1 Viewer)

[bruceames]

Digital sell through increased 18.1% and is now 23.7% of total sell through (up from 18.7% in 2014)


Physical sell through declined 12.0%. At the current rate of decline and digital sell through growth, digital sell through would overtake physical in 4 years. Don't think it'll happen though (18% digital growth isn't sustainable for that long, IMO).


Streaming up 25% and is now over $5 billion. Should be higher than physical sell through by next year.


Blu-ray down 6% for year but up in Q4 (thanks to strong box office power)


DVD down 15% for year and in Q4 as well.


Kiosk down slightly for the year, but decline has started to accelerate in Q3 and Q4


Digital now 49.3% of total spending. Should be more than half by next year.


http://degonline.org/wp-content/uploads/2016/01/External_2015-Year-end-DEG-Home-Entertainment-Spending-1-5-2016.pdf

 

[Towergrove]

Why would digital sell thru not be sustainable? What after that rise then fall? How low will physical go? I don't think streaming will continue to rise as much and may also peak. Again what after these rises stop? What's the next big thing? I see sell thru and rental streaming coexisting when the dust settles.

 

[zoetmb]

Why would digital sell thru not be sustainable? What after that rise then fall? How low will physical go? I don't think streaming will continue to rise as much and may also peak. Again what after these rises stop? What's the next big thing? I see sell thru and rental streaming coexisting when the dust settles.

It's inevitable that steaming is going to continue to grow, just as it has in the music market. We now have a generation of people who don't care much about owning media and even if they do, they don't care about owning physical media.

There are films that are so forgettable that one only needs to see them once. Those are like episodes of a TV show. And then there are those that one expects to watch many times - especially those that appeal to kids. "Jurassic World" sold 3.2 million units on Blu. "Big Hero 6" sold 2.68 million. "Frozen" has sold 7.2 million units on Blu. Since 2012, "Star Wars" had sold $200 million on Blu.

BD actually had a pretty good year considering the growth of streaming services. One bright spot is that the top 100 titles took a smaller share of the business than at any time in the last five years, indicating consumers are buying deeper.

The second quarter of 2016 should also get a big boost from Mockingjay II, Star Wars VII and later from 'Batman v Superman'. Zootopia, Jungle Book, the Alice in Wonderland sequel and Independence Day should also make for a strong 2016.

What will be interesting to see is whether consumers are interested in 4K media and whether they get it via streaming or physical media. For people who don't have enough bandwidth (or limited data minutes if watching remotely), physical media might be the only solution. Much of this will depend upon the economy and the adoption cycle for 4K TV. If the economy collapses again due to the problems in China, all bets are off, although cheap entertainment usually does well in a down cycle.

 

[Persianimmortal]

Much of this will depend upon the economy and the adoption cycle for 4K TV.

Perhaps not so much. Blu-ray sales did not remotely meet or beat DVD sales even when most people had transitioned to 1080p TV. Similarly, there's nothing to imply that the average consumer won't be completely satisfied with 1080p streaming on a 4K TV.

 

[zoetmb]

Perhaps not so much. Blu-ray sales did not remotely meet or beat DVD sales even when most people had transitioned to 1080p TV. Similarly, there's nothing to imply that the average consumer won't be completely satisfied with 1080p streaming on a 4K TV.

That's all true, but I have to believe that consumers have gotten more sophisticated since then. The "4K mantra" that they're hearing isn't just about TV - it's being marketed as part of smartphone cameras, DSLR's, etc.

For consumers, they won't be sold based on resolution alone since it's hard to perceive sitting at any reasonable distance from a TV. They'll be sold based upon HDR and wider color gamut. Or maybe none of that will make a difference and it will sell simply because there's fewer 1080p sets.

And while DVD sales still greatly exceeds BD sales, DVD is dropping at a much faster pace. DVD dropped 11% in units and 15% in dollars (in the U.S.) in 2015. Blu dropped 7% in units and 5.8% in dollars. Blu captured 33.5% of the physical market dollars and 22% of the units. Blu should have been far larger by now, but it's still close to a $2 billion business in the U.S.

 

[Persianimmortal]

The 4K mantra you're talking about is no different to the HD mantra of years gone by - and again, despite every marketing avenue touting the crystal clarity of HD, 75% of disc buyers have stuck with SD. I don't for a minute believe that consumer sophistication extends to understanding or caring about the subtle visual difference between upscaled 1080p and native 2160p content.

Those that do care, especially if they're wowed by HDR, will steadily upgrade their subscriptions to 4K streaming, or, where bandwidth doesn't permit, purchase a few 4K digital downloads. In my opinion, UHD BD will be the bottom rung on the 4K ladder, a stop-gap solution until 4K digital becomes ubiquitous. UHD BD may even do well initially on the back of buyers wanting new releases as demo material for their new 4K hardware. But ultimately, yet another physical disc format is a dead-end for mainstream buyers.

 

[Towergrove]

While physical media sales are down I don't see them going away. We have more choices now than we did in the past but the option to purchase vs rent will continue in the future, both physical and digital. I also fully expect streaming to top out soon. Netflix in the US is having slower growth now an they pretty much cover every country now. It's a fact in the US that Netflix growth is slowing. We see this in recent quarters. Music is a whole different Beast with most streaming subscribers choosing the free versions vs the monthly perpetuity rentals. Free is Not sustainable in the long stretch.

 

[bruceames]

Why would digital sell thru not be sustainable? What after that rise then fall? How low will physical go? I don't think streaming will continue to rise as much and may also peak. Again what after these rises stop? What's the next big thing? I see sell thru and rental streaming coexisting when the dust settles.

Hi Sarah,


I said 18% digital sell through growth is not sustainable, not that digital sell through itself is not sustainable. In 2014 it was up 30% and in 2013 50%. So you can see that the growth rate has been falling for some time.

 

[Towergrove]

Hi Sarah,

I said 18% digital sell through growth is not sustainable, not that digital sell through itself is not sustainable. In 2014 it was up 30% and in 2013 50%. So you can see that the growth rate has been falling for some time.

Hi Bruce! Thanks for the clarification. Hope your New Year is going well!
Sarah