Consumer Spending on Home Entertainment Rising for the First Time in Years 12:16 PM PDT 4/29/2012 by Thomas K. Arnold Justin Sullivan/Getty Images The Digital Entertainment Group reports that subscription streaming rose an estimated 545.5% in the first quarter of 2012, while rentals at brick-and-mortar stores fell a devastating 39.4%. Home video chiefs at the Hollywood studios finally have something to smile about. For the first time in years, consumer spending on home entertainment actually rose in the first quarter of 2012, rising 2.5% to $4.45 billion largely due to the strength of streaming, according to numbers compiled by DEG: The Digital Entertainment Group. The real good news for the studios, however, is that packaged media sales remained steady in the first quarter of 2012, with disc sales down less than 1% from the first quarter of 2011 – a sharp contrast to previous years, when first-quarter sales typically edged down in the double digits. According to DEG, consumers spent $2.06 billion on Blu-ray Discs and DVDs in the first three months of 2012, down just slightly from the estimated $2.07 they spent in the comparable period last year. Continued declines in DVD purchases were offset by a 23% rise in Blu-ray Disc sales, the DEG says. Add in electronic sellthrough, which posted a 17% gain in the first quarter, and total consumer spending on home entertainment purchases rose 0.5% to $2.22 billion. More good news for the studios: disc sales of theatrical movies rose 2% in the quarter, sales of catalog titles on Blu-ray Disc were up 27%, and TV on Blu-ray sales soared 54%. More than 40.8 million U.S. homes now have at least one device capable of playing Blu-ray Discs. The disc rental business didn’t fare as well. Rentals at brick-and-mortar stores fell 39.4% to $305 million, while subscription disc rental – mostly Netflix – was down an estimated 48% to $348 million, DEG claims. Kiosk rental – mostly Redbox – rose an estimated 30.1% to $523 million. Subscription streaming, however, rose an estimated 545.5% to $548.6 million, largely due to Netflix’s successful conversion of disc renters to streamers. Video-on-demand posted a smaller gain of 6.8%, rising to $505.3 million. Total rental spending – consisting of disc rentals as well as VOD and streaming – rose 4.4% to $2.23 billion from $2.13 billion in the first quarter of 2011. UltraViolet, the studio-backed, cloud-based “digital locker” service, service grew to 2 million accounts in the quarter, DEG reported.
Home Video Spending Up 2.5% In Q1 To $4.45B; Subscription Streaming Soars By DAVID LIEBERMAN, Executive Editor | Sunday April 29, 2012 @ 2:41pm EDT The data out today from DEG: The Digital Entertainment Group may suggest that the period of steep declines in home video spending — largely driven by the collapse of the DVD market — is over. But it also may just reflect the fact that the quarter had more popular movies: Films available on home video in the quarter did 12.5% better at the box office than did comparable releases last year. Whatever the reason, total sales of DVD and Blu-ray discs fell just 0.6% in Q1 to $2.06B; DEG says that Blu-ray now accounts for about a quarter of all disc sales. Throw in the $165M spent to buy digital files of movies and TV shows, and the sell-through market was up 0.5%. Digital vendors really showed their muscle in rentals. Spending on subscription streaming services such as Netflix was up 545.4% to $548.6M while digital VOD from providers including Apple’s iTunes was up 6.8% to $505.3M. Meanwhile, the rash of store closings at Blockbuster contributed to a 29.4% decline in rentals at bricks-and-mortar stores to $305M. And Netflix’s struggles with its DVD business helped to drive a 48.1% slide in subscription disc rentals to $348M. Bricks-and-mortar and subscription DVD rental services now individually do less business than pay TV’s VOD which was up 6.8% to $505.3M. Another winner: kiosk services led by Redbox. Their rocketed 30.1% to $523M. DEG says that consumers opened 2M UltraViolet accounts, enabling them to use mobile devices to stream the home videos they buy.
Hollywood hopes rise as Blu-ray, digital offset DVD decline By Ronald Grover | Reuters – 8 hours ago LOS ANGELES (Reuters) - Hollywood may be seeing a turnaround in a seven-year decline of home video sales, thanks to double-digit sales growth of Blu-ray discs and online movies and TV shows, an industry trade group is expected to announce on Sunday night. The Digital Entertainment Group, a trade group whose members include studios, consumer electronic companies and others, will report that U.S. consumers spent $4.5 billion on home entertainment in the first quarter this year, an increase of 2.5 percent from a year ago. That's the second quarter of growth in the last three quarters for home entertainment spending, which includes purchases and rentals of DVDs, Blu-ray discs and online, as well as subscriptions to services like Netflix. Overall spending declined on those items by 2.1 percent in 2011, to $18 billion, the seventh consecutive year of decline, according to data on the group's website. "The business feels as if it has begun to stabilize," said Ron Sanders, president of Warner Home Video and DEG president. "Hopefully, we've hit bottom." Sales of Blu-ray discs surged by 23 percent, the group said. That growth was spurred by strong Christmas sales of Blu-ray players, continued video sales of holiday releases like the hit "Kung Fu Panda 2" and the February release of the blockbuster "The Twilight Saga: Breaking Dawn - Part 1." Blu-ray growth partially offset the continued decline in DVD sales. Packaged good sales, which include both formats, fell by 0.6 percent from a year earlier, to $2.1 billion. Home sales of film and tv shows reversed that decline, and increased by 0.5 percent if sales through electronic outlets such as Apple's iTunes service are included. Consumers purchased $165 million of those so-called electronic sell-through products. The industry's largest growth engine continues to be online subscriptions, such as those offered by Netflix, which grew five-fold in the quarter, to $548.6 million. Most of that online subscription growth appears to come from Netflix customers who chose subscriptions for streaming over its traditional DVD by mail service when the company split the two options last year. Nationwide, DVD subscription sales fell by $322.8 million in the quarter. Industry officials expressed optimism that growth will continue, based on continued sales of Blu-ray players and introduction of the studio-backed UltraViolet service by which consumers can buy movies that are shared among several cloud-connected devices. Nearly 2 million users have signed up since the serviced was introduced late last year, DEG said. "We believe we're at an inflection point," said David Bishop, president of Worldwide Sony Pictures Home Entertainment. "We've created an installed base that will grow, and which we think will continue to give us momentum."
DEG: First Quarter Spending Continued to Stabilize in Q1 29 Apr, 2012 By: Stephanie Prange Home entertainment spending continued to stabilize in the first quarter of 2012 with overall consumer spending on rental and sellthrough of both packaged and digital media up 2.5% from the first quarter of 2011, to $4.45 billion, according to numbers released by DEG: The Digital Entertainment Group. Once again, Blu-ray Disc was a major driver, with spending jumping 23% for the quarter. Catalog sales on Blu-ray Disc were up 27%, and TV on Blu-ray sales were up 54%. Total household penetration of all Blu-ray compatible devices now stands at more than 40.8 million U.S. homes. Total sellthrough spending — including packaged media and electronic sellthrough — was flat, up less than a percent at $2.22 billion. Packaged good sales were flat as well, through theatrical disc sales (DVD and Blu-ray combined) grew 2%. Physical disc rental spending (minus streaming and VOD) fell 25% as Blockbuster and other physical rental stores shuttered in the quarter and Netflix lost disc customers. Subscription disc rentals fell nearly 50%. The lone physical rental winner, kiosk rentals, jumped 30% on the rise of Redbox. On the digital side, the studio-backed UltraViolet cloud-based storage service grew to 2 million accounts in the quarter, DEG reported. Meanwhile, electronic sellthrough grew 17% to $165 million, and VOD nearly 7% to $505.3 million. Subscription streaming jumped a whopping 545% to $548.6 million. Total digital spending — including VOD, EST and subscription streaming — grew 74% to $1.2 billion.
DEG had Blu-ray catalog doing +27% up YoY in the 1Q 2011 period even better than the +23% for Blu-ray. While that's not that much more and maybe within the margin of error its still might be significant as theoretically the growth in Blu-ray catalog sales would be more linked to Blu-ray's growth pace without regard to the variations in release strength or genre. Logically it makes perfect sense that Blu-ray catalog sales would improve as the total user base of Blu-ray owners increase and the articles above cited strong Blu-ray player sales in the holiday season as a factor. They would be even improving regardless as of new release strength as retailer support for Blu-ray improves and more Blu-ray owners enter the market over time. It will be interesting if the DEG mentions Blu-ray TV and catalog sales in the next report as well so we can get a longer trend there. Also if better Blu-ray new releases cause Blu-ray theatrical movie gains in the 2Q and the rest of the year to pace above that 27% growth in Blu-ray catalog sales. If the 27% growth rate for Blu-ray catalog sales is accurate then the Blu-ray growth rate for the next five months without a lot of major releases in the 2Q and 3Q should trend to that benchmark as well. Variety's take
Homevid biz grows 2.5% in first quarter Blu-ray, VOD, digital distribution pump sales Variety Posted: Sun., Apr. 29, 2012, 11:00am PT By MARC GRASER Hollywood's homevideo biz grew 2.5% during the first quarter, driven by stronger sales of Blu-ray discs, a growth in digital sales and VOD, although rentals remained strong through kiosks. During the three-month period, homevid generated $4.5 billion in sales overall, according to the Digital Entertainment Group. Sales of entertainment surpassed rentals -- $2.2 billion vs. $1.7 billion. The biggest gains during the three-month period came from subscription-based streaming services from companies like Netflix, which saw sales surge 545% to $549 million. Netflix saw revenue from its subscription-based disc-by-mail service fall 48% to $348 million. Kiosks operated by Redbox and others earned $523 million, growing 30% for the rental category. VOD improved 7% to collect $505 million in rental fees. The shuttering of more Blockbuster outlets caused in-store rentals to decline another 39% to $305 million. However, Blu-ray was up 23%, with sales of older catalog titles growing 27%, and TV shows on Blu-ray improving 54% during the quarter. Blu-ray discs now represent a quarter of all disc sales. An estimated 2.4 million Blu-ray players sold in the first quarter, with the tally including PlayStation 3 gaming consoles and home theaters in a box units. There are now 40.8 million Blu-ray devices in U.S. homes. The sales figure are a good sign for the studios, which are looking for ways to encourage more consumers to purchase rather than rent films and TV shows. The DEG said the results reflect "the continued stabilization of the industry." As studios put more promotional muscle behind digital locker service UltraViolet this year, the majors are hopeful that the electronic sell-through category will continue to grow; it was up 17% during the period to earn $165 million. More than 2 million UltraViolet accounts have now been created. During the same frame, 6.5 million HDTVs were sold in the U.S., with more than 77.6 million U.S. households own an HDTV set.
Bloomberg Home-Video Spending Rose 2.5% in First Quarter, DEG Says By Ye Xie - Apr 29, 2012 5:25 PM ET Home-video spending by U.S. consumers rose 2.5 percent in the first quarter from a year earlier, to $4.5 billion, driven by increased demand for Blu-ray discs, according to the Digital Entertainment Group. Blu-ray disc sales jumped 23 percent in the first three months of 2012, the industry-backed DEG said in a statement. Spending on packaged videos, including DVDs and Blu-ray, declined 0.6 percent to $2.1 billion, indicating a drop in DVD sales. Blu-ray accounted for a quarter of total spending on movie discs, compared with less than 15 percent two years ago, the Los Angeles-based group said. It didn’t break out specific dollar amounts within the packaged-goods category. Kiosk rentals, such as those provided by Coinstar Inc. (CSTR)’s Redbox, jumped 30 percent in the quarter to $523 million.
News Analysis Blu-ray Discs Leading Home Video Rebound By Swanni Washington, D.C. (April 29, 2012) -- For the first time in seven years, home video sales are rising thanks to double-digit sales growth for Blu-ray discs and online movies. That's according to the Digital Entertainment Group (DEG), as reported by Reuters. (The DEG is a trade group that represents studios and CE companies.) Reuters writes that the DEG is reporting that U.S. consumers spent $4.5 billion on home video in the first quarter this year, an increase of 2.5 percent compared to the 2011 first quarter. The increase marks the second quarter of growth in the last three quarters -- and there little doubt where the biggest improvement is coming from: Blu-ray. Sales of Blu-ray discs jumped 23 percent in the first quarter, led by big holiday releases such as The Twilight Saga: Breaking Dawn, Part I and Kung Fu Panda 2. While DVD sales continue to fall, the Blu-ray disc is breathing new life into the hard disc category. Overall disc sales fell just 0.6 percent in the first quarter, a strong improvement from previous quarters. “The business feels as if it has begun to stabilize,” stated DEG President Ron Sanders who's also president of Warner Home Video. Reuters writes that the DEG found that sales of all films and TV shows rose 0.5 percent in the first quarter when you also include online sales. The DEG says that the majority of online subscription growth is coming from Netflix customers who switched from DVD-only service to streaming last year.
Blu-ray Movie Sales Continue to Rise as Audience Transitions from DVD Digital distribution also sees steady growth according to Digital Entertainment Group Article | 04.29.12 | By John Gaudiosi The Digital Entertainment Group (DEG) has released sales data for the first three months of 2012 and things are looking up for the home entertainment industry. The first quarter of 2012 saw the continued stabilization of the industry underscored by promising gains in Blu-ray Disc, with steady increases in electronic sell-through (EST) and video-on-demand (VOD) spending, and modest growth in sell-through. Hit movies like Immortals have translated to strong sales in home entertainment. (See Henry Cavill discuss the movie in the exclusive video below.) Overall consumer spending was up 2.5 percent compared to the first quarter last year, driven by a healthy consumer appetite for Blu-ray. Blu-ray Disc saw continued double digit growth (up 23 percent) in sales over first quarter 2011. Indeed, Blu-ray Disc now accounts for one out of four of all of the physical sell-through dollars spent by consumers compared to less than 15 percent two years ago. The progress in Blu-ray Disc sales is even more significant when viewed as growth off an ever-increasing base. Highlights for the first quarter include: Blu-ray Disc and EST continued their steady gains with consumer spending on Blu-ray jumping 23 percent and EST up 17 percent compared to the same period last year. Physical sell-through of theatrical product was up two percent for the quarter, while catalog sales on Blu-ray Disc were up 27 percent, and TV on Blu-ray sales were up 54 percent, underscoring that Blu-ray Disc is the standard for quality home entertainment. With most major studios backing UltraViolet, and with the support of major retailers, consumers have embraced UltraViolet’s flexibility and value of ownership by opening nearly two million UltraViolet accounts to access and enjoy their movies and TV shows in the cloud. The number of Blu-ray homes continues to climb, with 2.4 million players sold in the first quarter (including BD set-tops, PS3s and HTiBs). Total household penetration of all Blu-ray compatible devices now stands at more than 40.8 million U.S. homes. Further, 6.5 million HDTVs were sold to U.S. consumers in the first quarter 2012. HDTV penetration to date is now at more than 77.6 million U.S. households.