Blu-ray Sales Historical Trends Reports and Discussion (1 Viewer)

Quick question: with all the tables and graphs, WHEN do you find time to watch any movies????

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Almost everyday I find time when I'm not traveling to watch HD movies.
I'm interested in the success of HD movies and home theater and I have friends who like my analysis.
Plus once I've started , I have a lot of guys out there who have encouraged me and look forward to my comments and data roll up update each week so I kinda feel obligated.
I multi task during the day and night. I watch at least a HD movie a day, maybe more, if I'm not on the road.
If I'm incrementally adding on to the charts each week it takes less time that creating them from scratch, so its a routine. Pretty much I'm analyzing them as I type, so it takes less time, although I make an occasional typo or make a mistake that I hopefully catch when I re read them in context.
I'm reasonably fluent in Excel skills and I don't spend a lot of time making them pretty. Its a subject I'm interested in and I'm just sharing the joy. Posting started as a professional writing exercise and its now a habit. Most of the time comes in when the new data from TheNumbers.com gets released and I do the unit calculations. Did I say that I multi task pretty well?
Plus at this point, I have a lot of you guys double checking my data, so I feel pretty confident that if/when I make mistakes someone will catch it, so I feel free to just post.
This is fun stuff to do analysis on. Much easier to do it than with other subjects that I've been paid to do in the past.
For me its a stream of consciousness, multitasking orgy of analysis, connections, trade connections, forwarded PMs, emails, telephone calls, trade magazine reading, and basic curiosity from me and my real world business associates and clients.
That and reasonably fast typing skills.
I just like sharing some of the information I can find and organize in a way that keeps things in perspective and helps kill the FUD. Plus its a hobby and habit now and I learn a lot that helps out my real world clients as well as my own home theater enjoyment.
I'd rather let the facts speak for themselves or at least have all sides of the arguments presented so people can think for themselves.
Last but not least, I think this time is a bit significant in the adoption of high definition video and lossless audio in the home. I've to a degree met a lot of players in the industry and I kinda feel almost that I'm been seeing a bit of marketing and consumer electronics history. So at this point, I'm just feeling obligated to go along for the ride and see it through.
Glad someone out there appreciates it.
Kosty

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For the uninitiated, Wal-Mart does not cooperative with any data aggregators directly anymore, as the largest retailer it figured it was getting less out of the deal. But the weekly Nielsen Videoscan first alert report pretty much takes the point of sale cash register electronically reported data each week and keeps track of every transaction by price and SKU.
So for the most part, unless Wal-Mart had a special promotion or event (like Twilight DVD special edition and no Blu-ray version at all a few months ago) the Wal-Mart rankings will be almost exactly like the rest of the market. Pretty much its a 100% census of packaged media sales each week of every retailer with more than one store in the country. Or if you will a 60% sample size of the DVD market and 75-80% sample size of the Blu-ray market down to the individual transaction level.
The home media magazine weekly revenues add in an adjustment for Wal-Mart on top of the Nielsen Videoscan data and my top 20 estimates in this thread do so as well.
As of mid December 2010 HMM has transitioned into using additional data for their revenue estimates with studio input. This should help them provide a more accurate estimate of Walmart DVD and Blu-ray sales over time. When new revenues are being published the previous years estimates may also be revised to the best available final data.

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2011 - The Year of the Turnaround for the Home Entertainment Industry?

The Year of the Turnaround?

26 Dec, 2011
By: Thomas K. Arnold

Home entertainment executives aren’t quite ready to sing “Happy Days Are Here Again,” but things certainly began to look up again in 2011.
Hollywood finally broke the back of Netflix — or, rather, watched Netflix break its own back — after years of railing against the subscription rental service for taking too many consumer dollars out of the market and not only cannibalizing sellthrough, but also not sharing to the degree the studios felt was appropriate.
The home entertainment industry also posted its first positive quarter since the start of the 2008 global economic meltdown, with consumer spending in the third quarter of 2011 actually up from the comparable year-ago period.
While electronic sellthrough, or EST, remained a nonstarter, the video-on-demand business began showing some serious signs of life, drawing consumers away from the physical rental business the studios have never really been keen on.
And in perhaps the biggest development of 2011, a consortium of studios and other companies launched UltraViolet, a cloud-based digital locker that lets consumers stream and download purchased content to multiple platforms and devices.
But it was packaged media’s comeback-kid performance in the tail end of the year that has studio executives looking forward to even better times ahead.
“We started out the year with tough year-over-year comps to box office, but have made steady gains throughout 2011, with an especially strong third quarter,” said Ron Sanders, president of Warner Home Video. “We seem to be getting some momentum in the sellthrough space, with catalog being a particular bright spot. Black Friday was very strong this year and also bodes well for a strong finish to 2011 and good momentum into the first quarter of 2012.
“The third-quarter numbers were an indicator that our business is on track for a strong performance for the rest of this year and into the future,” added David Bishop, president of Sony Pictures Home Entertainment. “A strong upcoming slate of highly anticipated new releases like The Girl With the Dragon Tattoo, Mission: Impossible — Ghost Protocol and Steven Spielberg’s War Horse, as well as franchise titles like Men in Black III, the new Spider-Man and the new ‘Batman,’ promise an even stronger 2012.”
Lori MacPherson, EVP of global product management for The Walt Disney Studios, said 2011 saw unprecedented synergy between technology and choice.
“As entertainment consumption choices are proliferating, 2011 was about harnessing technology to create innovative entertainment experiences for consumers wherever they enjoy our content,” she said. “From applications like Disney’s Second Screen that provide an immersive experience, to multimedia combo packs that offer the ultimate in functionality and convenience, to 3D, which provides yet another way to engage viewers, we’re continuing to explore ways to enhance the consumer experience.”
“2011 showed that home entertainment continues to excite and enthrall consumers,” added Dennis Maguire, president of worldwide home media distribution for Paramount Pictures. “Blu-ray and EST continued to surge, and new delivery systems and devices offer viewers more and more opportunities to enjoy our content, expanding demand even further.”

Lionsgate president Steve Beeks agrees.
“We don’t view the home entertainment landscape as an either/or proposition between our traditional and digital media partners,” he said. “We believe, instead, in the continued need to enhance the packaged-media experience through incorporation of new technologies — and, at the same time, capitalize on emerging opportunities to monetize our content through social networks, electronic sellthrough and myriad apps that enrich the home entertainment and mobile viewing experience.”
The plethora of new viewing options made managing windows more important than ever, Beeks said.
“We believe that it is important to listen to the consumer, and the consumer is telling us that they want flexibility and they attach premium value to sequenced windows with pricing based on convenience and availability,” he said. “The addition of sequential windows has historically enlarged the size of the home entertainment revenue pie, and we believe it will continue to do so. We will continue to explore new models and tailor availability to individual films in the premium-VOD space.”
After several tough years, the home entertainment industry also has learned to manage its expectations. The gaga days of DVD are gone, and Blu-ray Disc, which turned 5 in 2011, never had quite the same impact. But fault lies not with the format, but with a misinterpretation of consumer habits. The glory years of DVD had everyone convinced a nation of renters had become a nation of buyers, and once Blu-ray Disc took hold everyone would buy their libraries all over again.
But DVD was something of a false bubble; consumers had never before been able to own movies at an affordable price the very first day they hit home video, so they went overboard, buying movies they never intended to watch again and amassing huge collections of discs, many of them never opened.
Once the novelty wore off, consumers effectively split into two camps. The ones who had bought DVDs because the price was so low and it was more convenient than renting now had Netflix, Redbox and streaming to satisfy their cravings. Meanwhile, the ones who had become genuine collectors continued to buy, although a lot more selectively than before.
This year, the realization finally set in that the industry is unlikely to see a hot new release sell upwards of 10 million units its first couple of days in stores. But in the spirit of making lemonade from lemons, when a more modest sales tally is registered, it’s acknowledged and applauded — particularly since the consumer rush to buy on day one is over and the industry once again is seeing its product sprout legs.
That said, the success of Blu-ray Disc is nothing short of phenomenal. Even during the worst economic crisis since the Great Depression, the format continued to post sales gains — one of the only consumer products to do so other than the Apple iPhone.
And in the fourth quarter of 2011, Blu-ray Disc sales accelerated to the point where even family titles were generating at least half, if not more, of their sales from the high-definition disc — partly a function of the proliferation of combo packs, but also a reflection of growing consumer awareness and acceptance. Another factor, albeit to a lesser degree, was the emergence of Blu-ray 3D.
“Blu-ray had a remarkable year, with the format showing significant growth and bolstering overall home entertainment consumer spending for the first time in three years,” said Craig Kornblau, president of Universal Studios Home Entertainment. “New releases benefitted tremendously, with female-targeted comedies like Bridesmaids hitting the masses and surpassing industry expectations.
Catalog also saw impressive gains, as evidenced with the stellar Blu-ray debuts of such huge fan favorites as Scarface, Star Wars and The Big Lebowski. With the number of Blu-ray homes exceeding 30 million and growing — and with more than half of first-week sales of physical products now credited to Blu-ray — the consumer appetite for high-def movies has never been more palpable.”
Indeed, summer tentpoles such as 20th Century Fox’s X-Men: First Class and Warner’s Harry Potter and the Deathly Hallows — Part 2 sold incredibly well on Blu-ray, beating studio expectations by as much as 20%, insiders say. Warner didn’t release sales numbers, but Fox says the latest 'X-Men' movie is on track to sell nearly 8 million units, half of them on Blu-ray.
Catalog sales, too, are finally starting to climb, with another Fox title, the six-film Star Wars: The Complete Saga, selling 1 million Blu-ray Disc units — 515,000 of them in North America — its first week in stores, an unprecedented number for a nine-disc set at a premium price. First-week sales represented $84 million in worldwide consumer spending.
“2012 will extend growth for Blu-ray, and it will continue to drive the high-definition revolution in American homes,” said Mike Dunn, president of 20th Century Fox Home Entertainment.
Other studio presidents agree.
“Consumers are stepping up their purchases of Blu-ray, and we see this continuing into 2012,” said Warner’s Sanders. “The connected BD devices are selling at incredibly compelling price points this fourth quarter, and hardware sales continue to be very strong.”
“In 2011 we saw steady growth for Blu-ray and the launch of Blu-ray 3D, which provides unique opportunities for new release and catalog programming,” added Disney’s MacPherson.
Netflix continued to make headlines in 2011. As the year began, the once-frosty relationship between the studios and Netflix had thawed to one of grudging acceptance, with most studios holding back new releases in return for lower prices. But while the studios may have holstered their guns, Netflix took a big hit when Starz Entertainment ended content license renegotiations, losing access to movies from Walt Disney Studios and Sony Pictures Entertainment once the current deal expires next February. A short time later came a self-inflicted wound: an ill-fated attempt to spin off the disc rental segment of its business, which sent its stock price spiraling downward.
The year’s other biggest headline was the launch of UltraViolet, a digital rights authentication and cloud-based licensing system with a “buy once, play anywhere” approach. Consumers can store digital proof-of-purchases under one account and then play back their content at any time, on virtually any device. UltraViolet was developed and deployed by the Digital Entertainment Content Ecosystem consortium, which includes five of the six major studios and mini-major Lionsgate, as well as retailers, consumer electronics manufacturers, cable companies, ISPs, network hosting vendors and other Internet vendors. The only flies in the ointment: Apple doesn’t support it, and Walt Disney Studios is developing its own competing digital locker, Disney Studio All Access.
“UltraViolet has had a good start, given the limited amount of titles in the system so far,” Sanders said. “The conversion rates for UV digital copies are very good on Blu-ray, which we think is also driving sales of new releases. Consumers are excited about the prospects for streaming and mobile device use with UV, and we think as the ecosystem continues to develop, it only drives more consumers to own more content.”
To be sure, challenges remain. 3D has yet to come into its own, in large part due to the various competing formats on the hardware side. BD-Live never became a major selling point, and retail merchandising on behalf of Blu-ray Disc, in the minds of many observers, remains woefully inadequate compared with the royal welcome afforded DVD a decade ago.

But the studios, to their credit, appear ready and willing to try anything to grow the business, from Warner Home Video offering movie rentals on Facebook to three studios cutting a deal with Google to add more than 3,000 films for rent on YouTube, some available the same day as the DVD and Blu-ray Disc.
“We have to be innovative and adapt to consumer trends,” Sanders said. “We’ve seen from adjacent content categories that to ignore the consumer can have dire consequences. While the consumption of content has become more complicated, we have to keep offering new and creative ways for consumers to discover and enjoy our films and TV shows.”
On the retail front, the home entertainment world continues to revolve around Walmart, Target, Best Buy and, to a lesser extent, Costco and Amazon. Borders went bust, and Blockbuster was salvaged from bankruptcy by a satellite company, Dish Network, in a deal that still has observers scratching their heads and wondering, “Why?”
Studio executives continue to see the retail channel as critical to the success of packaged media, their biggest profit-generator. They chalked up some gains in 2011 on the merchandising front when Target began putting new releases on checkout-lane endcaps, Walmart shed the locked cabinets and integrated Blu-ray Disc with DVD, and Best Buy, in a sweeping store redesign, moved movies in with home theater hardware. But, at the same time, the proverbial “race to the bottom” intensified, with new Blu-ray Discs selling for less than $15, even lower than first-week pricing on DVD in the halcyon days of that format.
Overall, however, studio executives are quite pleased with the current retail environment for Blu-ray Disc and DVD.
“We were very encouraged this year by all of our largest retail partners, who clearly reinforced their tremendous commitment to our category,” said Universal Studios’ Kornblau. “Not only did they significantly grow their home entertainment footprints in stores to include expanding the space in the main aisle and adding new releases fixtures at the front of store, but they also excelled in successfully leveraging the industry’s biggest movie releases to drive greater store traffic. As a result, we saw some of the year’s biggest successes, such as our own Fast Five and Bridemaids, benefit substantially from the heightened level of excitement and increased purchase activity.”
What does 2012 hold in store? Powered by a strong slate of product in the pipeline as well as the promise of 3D, packaged-media sales are expected to once again post year-over-year gains, while digital, spurred by UltraViolet, will grow “exponentially,” as Sony Pictures’ Bishop puts it.
“UltraViolet will prove to be a major game changer and will be an important complement to physical product,” Bishop said. “I am confident that as our industry satisfies consumer demand for great entertainment and provides convenient digital and physical distribution, our business will continue its robust performance.”
Sanders shares Bishop’s optimism.
“We foresee a broad rollout of UV, with more studios, much more product and strong retailer involvement,” he said. “Blu-ray will continue its growth through the year, especially as price points for catalog become more competitive. We also see a faster digital adoption of content, both with UV functionality across devices and the conversion of DVD’s to digital libraries in the cloud.”
Disney’s MacPherson also is looking forward to the new year.
“In 2012,” she said, “we’ll see greater consumption of Blu-ray and the many digital offerings, new and compelling 3D applications as well as the emergence of even more ubiquitous consumer access to our content.”
Paramount’s Maguire also believes “this upward trend” the home entertainment industry saw in the tail end of 2011 will continue, “as entertainment centers in the home get more sophisticated and the consumers who own them become more appreciative of high-definition, 3D and other enhancements.”
“We’ll also see continued growth in digital delivery,” he added, “giving us multiple ways to provide and monetize our content.”

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Warner
But it was packaged media’s comeback-kid performance in the tail end of the year that has studio executives looking forward to even better times ahead.
“We started out the year with tough year-over-year comps to box office, but have made steady gains throughout 2011, with an especially strong third quarter,” said Ron Sanders, president of Warner Home Video.
“We seem to be getting some momentum in the sellthrough space, with catalog being a particular bright spot. Black Friday was very strong this year and also bodes well for a strong finish to 2011 and good momentum into the first quarter of 2012."

“Consumers are stepping up their purchases of Blu-ray, and we see this continuing into 2012,” said Warner’s Sanders. “The connected BD devices are selling at incredibly compelling price points this fourth quarter, and hardware sales continue to be very strong.”
“UltraViolet has had a good start, given the limited amount of titles in the system so far,” Sanders said. “The conversion rates for UV digital copies are very good on Blu-ray, which we think is also driving sales of new releases. Consumers are excited about the prospects for streaming and mobile device use with UV, and we think as the ecosystem continues to develop, it only drives more consumers to own more content.”
“We have to be innovative and adapt to consumer trends,” Sanders said. “We’ve seen from adjacent content categories that to ignore the consumer can have dire consequences. While the consumption of content has become more complicated, we have to keep offering new and creative ways for consumers to discover and enjoy our films and TV shows.”
Sanders shares Bishop’s optimism.
“We foresee a broad rollout of UV, with more studios, much more product and strong retailer involvement,” he said. “Blu-ray will continue its growth through the year, especially as price points for catalog become more competitive. We also see a faster digital adoption of content, both with UV functionality across devices and the conversion of DVD’s to digital libraries in the cloud.”

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Sony
“The third-quarter numbers were an indicator that our business is on track for a strong performance for the rest of this year and into the future,” added David Bishop, president of Sony Pictures Home Entertainment. “A strong upcoming slate of highly anticipated new releases like The Girl With the Dragon Tattoo, Mission: Impossible — Ghost Protocol and Steven Spielberg’s War Horse, as well as franchise titles like Men in Black III, the new Spider-Man and the new ‘Batman,’ promise an even stronger 2012.”
What does 2012 hold in store? Powered by a strong slate of product in the pipeline as well as the promise of 3D, packaged-media sales are expected to once again post year-over-year gains, while digital, spurred by UltraViolet, will grow “exponentially,” as Sony Pictures’ Bishop puts it.
“UltraViolet will prove to be a major game changer and will be an important complement to physical product,” Bishop said. “I am confident that as our industry satisfies consumer demand for great entertainment and provides convenient digital and physical distribution, our business will continue its robust performance.”

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Walt Disney
Lori MacPherson, EVP of global product management for The Walt Disney Studios, said 2011 saw unprecedented synergy between technology and choice.
“As entertainment consumption choices are proliferating, 2011 was about harnessing technology to create innovative entertainment experiences for consumers wherever they enjoy our content,” she said. “From applications like Disney’s Second Screen that provide an immersive experience, to multimedia combo packs that offer the ultimate in functionality and convenience, to 3D, which provides yet another way to engage viewers, we’re continuing to explore ways to enhance the consumer experience.”
“In 2011 we saw steady growth for Blu-ray and the launch of Blu-ray 3D, which provides unique opportunities for new release and catalog programming,” added Disney’s MacPherson.
Disney’s MacPherson also is looking forward to the new year.
“In 2012,” she said, “we’ll see greater consumption of Blu-ray and the many digital offerings, new and compelling 3D applications as well as the emergence of even more ubiquitous consumer access to our content.”

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Paramount
“2011 showed that home entertainment continues to excite and enthrall consumers,” added Dennis Maguire, president of worldwide home media distribution for Paramount Pictures. “Blu-ray and EST continued to surge, and new delivery systems and devices offer viewers more and more opportunities to enjoy our content, expanding demand even further.”
Paramount’s Maguire also believes “this upward trend” the home entertainment industry saw in the tail end of 2011 will continue, “as entertainment centers in the home get more sophisticated and the consumers who own them become more appreciative of high-definition, 3D and other enhancements.”
“We’ll also see continued growth in digital delivery,” he added, “giving us multiple ways to provide and monetize our content.”

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Lionsgate

Lionsgate president Steve Beeks agrees.
“We don’t view the home entertainment landscape as an either/or proposition between our traditional and digital media partners,” he said.
“We believe, instead, in the continued need to enhance the packaged-media experience through incorporation of new technologies — and, at the same time, capitalize on emerging opportunities to monetize our content through social networks, electronic sellthrough and myriad apps that enrich the home entertainment and mobile viewing experience.”
The plethora of new viewing options made managing windows more important than ever, Beeks said.
“We believe that it is important to listen to the consumer, and the consumer is telling us that they want flexibility and they attach premium value to sequenced windows with pricing based on convenience and availability,” he said. “The addition of sequential windows has historically enlarged the size of the home entertainment revenue pie, and we believe it will continue to do so. We will continue to explore new models and tailor availability to individual films in the premium-VOD space.”

Click to expand...

Universal
“Blu-ray had a remarkable year, with the format showing significant growth and bolstering overall home entertainment consumer spending for the first time in three years,” said Craig Kornblau, president of Universal Studios Home Entertainment.
“New releases benefitted tremendously, with female-targeted comedies like Bridesmaids hitting the masses and surpassing industry expectations. Catalog also saw impressive gains, as evidenced with the stellar Blu-ray debuts of such huge fan favorites as Scarface, Star Wars and The Big Lebowski.[/B]
With the number of Blu-ray homes exceeding 30 million and growing — and with more than half of first-week sales of physical products now credited to Blu-ray — the consumer appetite for high-def movies has never been more palpable.”
“We were very encouraged this year by all of our largest retail partners, who clearly reinforced their tremendous commitment to our category,” said Universal Studios’ Kornblau. “Not only did they significantly grow their home entertainment footprints in stores to include expanding the space in the main aisle and adding new releases fixtures at the front of store, but they also excelled in successfully leveraging the industry’s biggest movie releases to drive greater store traffic.
As a result, we saw some of the year’s biggest successes, such as our own Fast Five and Bridemaids, benefit substantially from the heightened level of excitement and increased purchase activity.”

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Fox
“2012 will extend growth for Blu-ray, and it will continue to drive the high-definition revolution in American homes,” said Mike Dunn, president of 20th Century Fox Home Entertainment.
Other studio presidents agree.

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Time Warner CFO: Q4 Home Entertainment Sales ‘Challenged’

5 Jan, 2012
By: Erik Gruenwedel

CFO John Martin says Warner Bros. is well-positioned to face 2012 transformations in home entertainment
Warner Bros.’ adoption of alternative distribution channels in home entertainment should help the studio weather continued challenges to the home video sellthrough market, Time Warner’s CFO told an investor group.
Speaking Jan. 5 at the Citi Global Entertainment, Media & Telecommunications Conference in San Francisco, CFO John Martin said promising third-quarter results in home entertainment spearheaded by a resurgence in Blu-ray Disc sales appeared to have hit a wall in the just-completed fourth quarter.
“We had encouraging industry results in the third quarter and I understand the results coming out for the fourth quarter look a little bit more challenged, although we’re just getting them now,” Martin said.
The Citi moderator said internal data suggested Warner's home video sales tallied $2.6 billion in 2011 — down from a peak of $3.5 billion in 2007. At the same time, the studio, which includes Warner Home Video, has seen its box office revenue increase from $1.4 billion in 2007 to $1.8 billion last year.
Martin pointed out that Warner Home Video continues to top the annual home video sellthrough chart since such tabulation began. He said that when the final Q4 numbers come in, he believes WHV will have “dramatically” taken additional market share in home entertainment.

“Look, the challenges still exist [in home video],” he said, adding that the perceived secular challenges prompted the studio to embrace alternative distribution strategies such as street-date transactional video-on-demand and premium VOD, among others. “Warner Bros. has been the leading studio at trying top move toward embracing new technology, advantaging channels that are higher margin and disadvantaging those channels that are lower margin.”
Martin said it is that mindset that propelled Warner to spearhead rollout of digital locker UltraViolet, which he said is designed to spur sellthrough and make it easier for consumers to manage their content in a cloud-based format.
He said current adoption of UltraViolet is “not where we want it to be” but that Warner took the leadership position at the time when ongoing technological challenges mandated action.
“Somebody’s got to try and move forward because the industry has to move more quickly to embrace these higher-margin opportunities,” Martin said.
He said the studio has high hopes for Christopher Nolan’s new “Batman” movie, The Dark Knight Rises, which bows theatrically in the summer and in home entertainment channels thereafter. Martin said recent release of the title’s trailer on YouTube generated more than 12 million views — an industry record, he said.
Finally, Martin reiterated Time Warner’s view on subscription video-on-demand and Netflix in general is that it continues to be a “very interesting way” for consumers to watch older product that cannot be better monetized through other windows, including syndication. He said the studio continues to talk to “any number” of SVOD players about content licensing.
“We have 7,000 movies, 75,000 TV episodes and all of them need to be watched, and all of them need to be paid for,” he said. “We have a lot of stuff that has yet to monetized. And if you look outside of the U.S., virtually nothing has been monetized.”

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From the DEG release:
Hollywood’s home entertainment recovery continued in 2011 as consumers bolstered their home viewing experience with HDTVs, Blu-ray Disc players and discs, as well as the expanding offerings through electronic sell-through (EST) and video on demand (VOD) services.
Total consumer spending on home filmed entertainment for the second half of the year rose nearly one percent, fueled by a strong third quarter in which spending was up five percent, which marked the first quarterly increase since 2008. While overall spending for the category was slightly down two percent for the year, the industry’s performance clearly stabilized in 2011.
The recovery continues to be driven by high margin products that are gaining a foothold among consumers, a further indication that the home entertainment market is rebounding and in a healthy state. Among the various services and platforms delivering filmed entertainment, these higher margin businesses — Blu-ray Disc, EST and VOD — showed the strongest growth rates. Some highlights for the year:
• Blu-ray Disc and EST continued to perform remarkably well with consumer spending on Blu-ray sell-through up 20 percent and EST up nine percent for the year. Additionally, consumer spending on VOD was up seven percent.
• Blu-ray Disc has evolved to become the standard for home entertainment. Impressively, both new release and catalog sales saw double digit growth of 20 percent in 2011.
• Increasing the value of ownership for movie lovers, Sony Pictures Home Entertainment, Universal Studios Home Entertainment and Warner Home Video launched their first Blu-ray Disc titles with UltraViolet in 2011. The DEG estimates that more than 100 UltraViolet titles will be available in 2012. Paramount Home Entertainment also has plans to launch titles in 2012.
• The number of Blu-ray homes continues to grow rapidly as Blu-ray players offer consumers increased versatility and affordability. Total Blu-ray penetration in 2011 jumped 38 percent (including BD set-tops, PS3s and HTiBs) with total household penetration of all Blu-ray compatible devices now at nearly 40 million U.S. homes.
• Further, consumers enhanced their home viewing experience by purchasing more than 27 million HDTVs during 2011. HDTV penetration is now at more than 74.5 million U.S. households.
• Consumers continue to show a keen interest in 3D TV, with a dramatic year-over-year increase in titles and unit sales of 3D Blu-ray Discs. Available 3D Blu-ray Disc titles more than tripled in 2011 compared to 2010, growing from 20 to 65, while unit sales increased more than six times in the same period. Some of the major movies now on 3D Blu-ray disc include Avatar, The Lion King, Cars 2, and Pirates of the Caribbean: On Stranger Tides. Source: The Nielsen Company, VideoScan
• The bestselling Blu-ray Disc titles of the year hit major milestones with five titles selling in excess of two million discs. The overall top 10 bestselling home entertainment titles this year, according to Nielsen VideoScan First Alert are:
1. Harry Potter – Deathly Hallows, Part 1
2. Harry Potter – Deathly Hallows, Part 2
3. Tangled
4. Cars 2
5. Transformers – Dark of Moon
6. Bridesmaids
7. Rio
8. The Help
9. Lion King
10. Hangover Part 2

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BDA Sees Blu-ray Growth For Years To Come

By Greg Tarr -- TWICE, 1/10/2012
LAS VEGAS — The future of home video entertainment may be coming from the Cloud, but the trusty Blu-ray Disc player continues to drive volume sales growth and revenue opportunities today.
That was the assessment of Andy Parsons, Blu-ray Disc Association (BDA) U.S. promotions committee chairman and Pioneer Electronics communications and advanced product development senior VP. The BDA is a multi-industry-supported promotional group that is dedicated to promoting developments in the Blu-ray Disc (BD) format.
“While it seems so logical and so obvious to many casual observers that all SD and HD programming will soon be distributed via the Internet, this all-or-nothing argument is too simplistic. What about bandwidth limitations of typical households?” Parsons asked, while comparing the prophesied extinction of optical discs to past predictions of the paperless office.
He pointed out that the average broadband connection speed in the U.S. today is about 5Mbps, which is not enough to support all the content being delivered on discs, including the HD quality and extra content afforded the 50GB Blu-ray platter.
Consumers are also attracted to the ease of use and collectability of physical media. Meanwhile, the continued growth of HDTV penetration and dramatically lower prices for BD players bodes well for demand sustainability, he said.
As for today’s software business, Blu-ray content sales grew 58 percent year over year in the third quarter of 2011, contributing to a cumulative 33.6 million unit U.S. household penetration, according to the Digital Entertainment Group (DEG).
Its latest industry report even showed significant growth in the rental of packaged media, despite the disappearance of numerous mom-and-pop stores.
“I think one key reason for this is that you simply can’t get access to most of the newest content via streaming,” Parsons added. “If I want to see a film that was just released on disc a month or so ago, I probably won’t find it on any of the legitimate streaming services that consumers subscribe to, but I can buy it or rent it on disc.”
Disc-by-mail services should be sufficient to carry the load for the foreseeable future, Parsons added, and they often provide availability and convenience that the momand- pop stores lacked.
Even as Netflix and Blockbuster expand their streaming and download services, renting physical media appears to be in their cards for some time to come.
“I just can’t see how any online rental service can provide a full range of content to their customers without discs, at least not anytime soon,” he said. “I don’t think streaming can really replace discs until it’s truly ubiquitous, matches the content availability, and works as reliably as discs.”
Still, Parsons said, streaming can be very convenient, and “it would be foolish to say that it’s not important. Our position is that it will take far, far longer to fully replace physical media than some people are predicting. Both disc and Internet consumption can coexist for many years to come.”
As for the future of Blu-ray 3D format, Parsons said it’s growing and is “as much a content-driven business as regular Blu-ray and DVD have been, so as the population of titles continues to grow, the interest level among consumers should continue to grow as well.”
He added, “The growth is also somewhat regulated by the adoption rate of 3D HDTV sets, which has grown at a very decent rate — up to about 3 percent penetration, I think — considering that these sets haven’t been on the market very long.”
Still, as prices on BD players drop below the $100 mark, the future for category feature advancement seems limited.
Parsons, though, said, “Bluray players deserve more credit than they get for being the most versatile content nerve center you can buy for your living room.”
At the same time, he said he still sees a promising market for “more upscale players that emphasize quality more than quantity of content.”
For the future, “I think we’ll continue to see new features appear initially at the higher end, such as 1080p-to-4K up-conversion as these displays begin to enter the market. It also may be possible to improve streamed content picture quality with realtime signal processing, much as we do with highly compressed audio streams in some home products.”
Another promising recent development was the introduction of the Ultraviolet virtual content locker system that enables consumers to pay one price to buy conforming Blu-ray Disc movies along with the rights to access the title in streaming, download and digital copy form for playback on other devices.
“We see Ultraviolet as a way of expanding the functionality of Blu-ray content, as it adds value to the ownership model,” Parsons explained. “I’m personally a big fan of Digital Copy because I travel a lot and like to watch movies on my iPad. Spending a couple of extra dollars for this feature is well worth it to me. Ultraviolet is very similar, except that it encompasses a larger array of platforms through both streaming and downloads.”
As for the future of the BDA, the promotional group will be helping to explain what Ultraviolet is and does as “another compelling reason to invest in Blu-ray titles,” he said. It will also be leveraging online and socialmedia tools in the coming year to present the creators of the BD software and hardware “to explain why they are passionate about the format.”
They will also work with influential “mom bloggers” who have followings outside of the usual technology audience to help explain why recordable Blu-ray is a great way to enjoy and archive personal content.

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Blu-ray Sales Up 20 Percent in 2011; Brick-and-Mortar Rental Activity Down 28.8 Percent

11:27 AM PST 1/10/2012 by Thomas K. Arnold

Courtesy of Warner Bros.
"Harry Potter and the Deathly Hallows Part I"
"Harry Potter and the Deathly Hallows Part 1" and "Part 2" were the top-selling titles of the past year, according to Digital Entertainment Group data.
Blu-ray Disc continued to post remarkable gains in 2011 as overall consumer spending on home entertainment stabilized after several years of precipitous drops, according to numbers released this morning by DEG: The Digital Entertainment Group.
Consumers spent a total of $18.04 billion on Blu-ray Disc, DVD and digital sales and rentals during the year, about 2% less than the $18.43 billion they spent in 2010, according to DEG, which bases its figures on studio and retail data.
The box office value of films that came to home entertainment during the year, by comparison, was down 8.7%.
Blu-ray sales soared above $2 billion for the first time ever, rising 20% in the year, as the number of U.S. households with at least one Blu-ray playback device rose to nearly 40 million, a 38% gain from the prior year.
Total consumer spending on packaged media, Blu-ray and DVD, slipped slightly more than 13% to $8.95 billion from $10.52 billion in 2010.
Rental spending (packaged media only) was down 3% to $7.54 billion from $7.6 billion the previous year, with a 28.8% drop in brick-and-mortar rental activity offset by a 31% uptick in the kiosk rental business, mostly Redbox vending machines.
But those declines are to be expected, observers say, as consumers transition to digital delivery, mostly streaming. Overall spending on digital delivery rose 51% to nearly $3.42 billion, up from $2.26 billion in 2010.
The largest chunk of that went to VOD ($1.87 billion) and the new category of subscription streaming ($993.6 million), while electronic sellthrough remained a nonstarter at $553.7 million.

DEG also announced the 10 best-selling titles of 2011, although no specific unit sales totals were provided. The top sellers are, in order, Harry Potter and the Deathly Hallows Part 1, Harry Potter and the Deathly Hallows Part 2, Tangled, Cars 2, Transformers: Dark of the Moon, Bridesmaids, Rio, The Help, The Lion King and The Hangover Part 2.TE]

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DEG: Blu-ray, Digital Helped Lift 2011
10 Jan, 2012
By: Chris Tribbey, Thomas K. Arnold

Higher-margin products and strong consumer spending on Blu-ray Disc helped stabilize the home entertainment industry in 2011, according to full-year figures released Jan. 9 by DEG: The Digital Entertainment Group.
While overall spending on packaged media and digital delivery was down 2% for the year to an estimated $18.04 billion, down from $18.43 billion in 2010, a 20% jump in Blu-ray spending and a 51% jump in digital spending point to a sustained recovery for the industry, DEG reported.
The box office value of films that came to home entertainment during the year, by comparison, was down 8.7%.
The second half of 2011 saw consumer spending on home entertainment up 1%, and the third quarter saw a 5% rise, the first quarterly increase since the first quarter of 2008.
Annual spending on Blu-ray software hit $2 billion for the first time, and Blu-ray players are now in nearly 40 million homes, a 38% rise from 2010.
Electronic sellthrough spending was up 9% for the year, while VOD saw a 7% rise. 3D Blu-ray Disc unit sales were up sixfold year-over-year.
Helping drive Blu-ray spending was the further adoption of HDTV, with more than 27 million HDTVs purchased in 2011, bringing household penetration to more than 74.5 million American homes, DEG reported.
Total consumer spending on packaged media, Blu-ray and DVD, slipped slightly more than 13% to $8.95 billion from $10.52 billion in 2010. Rental spending (packaged media only) was down 3% to $7.54 billion from $7.6 billion the previous year, with a 28.8% drop in brick-and-mortar rental activity offset by a 31% uptick in the kiosk rental business, mostly Redbox vending machines.
But those declines are to be expected, observers say, as consumers transition to digital delivery, mostly streaming. Overall spending on digital delivery rose 51% to nearly $3.42 billion, up from $2.26 billion in 2010. The largest chunk of that went to VOD ($1.87 billion) and the new category of subscription streaming ($993.6 million), while electronic sellthrough remained a nonstarter at $553.7 million.
Five of the 10 best-selling titles of 2011 (in order, Harry Potter and the Deathly Hallows — Part 1, Harry Potter and the Deathly Hallows — Part 2, Tangled, Cars 2 and Transformers: Dark of the Moon) sold more than 2 million discs, according to the data. The rest of the top-selling titles were Bridesmaids, Rio, The Help, The Lion King and The Hangover Part 2.
Looking at 2012, DEG says UltraViolet — the buy-once, play-anywhere, cloud-based digital copy platform — will help keep disc sellthrough relevant, with an estimated 100-plus UltraViolet-enabled titles released during the year.

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The Bleeding In The Home Entertainment Business Slowed In 2011

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The home-entertainment business has been pummeled in recent years, with revenues falling for seven years in a row, in one year a full 8 percent. But last year, according to the latest numbers from a research group, things brightened slightly, thanks mostly to the rapid growth of digital streaming.
The Digital Entertainment Group, a research consortium backed by Hollywood’s major studios, released data Tuesday showing that overall home entertainment revenue declined only 2 percent in 2011.

As shrinkage goes, it was the smallest since 2008 for the challenged entertainment sector, which tallied $18.4 billion in total rentals and sales for the year, according to DEG.
That $18.4 billion includes the revenue for everything from DVD and Blu-ray, to cable and satellite VOD, to downloads and streaming, of movie and TV content. Interestingly, in the second half of 2011, the DEG reported that revenue from rentals and sales of “home filmed entertainment,” physical and digital alike, actually rose 1 percent.
Even though the DEG is backed by the studios, its revenue numbers are often cited as official benchmarks of industry performance.
According to the DEG, the home entertainment market has declined every year since 2004, when it peaked at $21.8 billion, mainly because of the decline of DVD sales.
One caveat to the latest numbers from the DEG: They were helped by a change in the group’s equation. For the first time, the DEG included revenue from subscription streaming services, which resulted in nearly $994.6 million in additional revenue for 2011.
Overall digital spending for home entertainment – which includes VOD through various carrier services like DirecTV (NYSE: DTV) and Comcast, and electronic sell-through via vendors like Apple’s iTunes – was up 50 percent, according to the trade group, to $3.4 billion.
SEE ALSO: Interview Part 2: Netflix’s Hastings Hurt By Criticism But Over Transition
The kiosk business continued to grow, too, with rentals through outlets like Redbox increasing 31 percent to $1.66 billion. And rentals of Blu-ray and DVD through subscription services like Netflix (NSDQ: NFLX) kept on growing, as well, increasing 4.1 percent to $2.36 billion.
As the studio-backed trade group is prone to do, it touted the performance of high-margin physical media, noting that Blu-ray sales and rentals had increased 20 percent in 2011, reaching $2 billion for the first time.
Still, the market’s legacy revenue streams remain in steep decline. Rental through brick-and-mortar outlets continued to circle the drain, declining 29 percent to just $1.64 billion. And overall sales of “packaged goods” – DVD and Blu-ray – declined 13 percent to $8.9 billion, brought down by the continued cratering of the older format.

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LA Times
Company Town
THE BUSINESS BEHIND THE SHOW
Ben Fritz and Dawn C. Chmielewski
Studios tout UltraViolet as home entertainment revenue falls 2%
January 10, 2012 | 6:42 pm
http://latimesblogs.latimes.com/.a/6a00d8341c630a53ef0162ff5d1f41970d-600wi
Photo: Customers shop for DVDs at a Target store
Hollywood's seven year decline in total home entertainment revenue continued in 2011, but slowed to a modest 2% drop thanks to booming business from kiosks, Blu-ray discs and the Web.
However, movie sales, as opposed to rentals, dropped 12%. That's a problem for film studios, as DVD sales have represented their biggest source of profit over the last decade.
To address the issue, all of Hollywood's major studios except Disney have been working with a coalition of technology companies and retailers on a new initiative called UltraViolet. To spur ownership of movies online, the technology allows consumers to store copies in a digital "cloud" that can be accessed on a variety of devices.
UltraViolet had a troubled launch in October, with technology that some consumers found cumbersome because of the numerous registration steps and new pieces of software that had to be installed. Reactions on message boards, technology blogs and Twitter were overwhelmingly negative.
At a news conference Tuesday at the Consumer Electronics Show in Las Vegas, backers said that 750,000 households have registered to use UltraViolet, but admitted there were some early stumbles.
“The best way to describe the launch is we built this great house, it had an incredible foundation, and in our excitement to move in there was some finished carpentry that still needed to be done,” said Sony Pictures Chief Technology Officer Mitch Singer.
Also announced were some new developments that could help UltraViolet pick up steam. Panasonic and Samsung are both launching Blu-ray players that can read a compatible disc and automatically add the film to a user's digital locker online.
The Samsung device will even let consumers add certain movies they bought on DVD or Blu-ray before UltraViolet existed to their online collection for what a news release described as a "nominal amount" of money.
In addition, Amazon.com announced that it will soon start selling digital downloads of movies from one studio in the UltraViolet format. That's a significant step because previously UltraViolet copies have come as codes with Blu-ray discs and DVDs and could only be accessed online with software from Warner Bros.-owned Flixster.
Amazon Executive Vice President of Digital Content Bill Carr said the partnership with a studio that he declined to identify was signed in the last few days.
According to data released late Monday by the Digital Entertainment Group, total home entertainment revenue in 2011 was $18 billion, down from $18.4 billion the previous year and a high of $21.8 billion in 2004.
Among the businesses that grew significantly were Blu-ray discs at 20% to more than $2 billion, rentals from kiosks such as Redbox to $1.7 billion, and digital downloads and video-on-demand rentals, which grew a combined 7% to $2.4 billion.
Online subscription streaming, a business dominated by Netflix, hit $993 million in 2011, the first year that the Digital Entertainment Group broke out the business into its own category.
However, all of that growth was not enough to make up for the loss of $1.3 billion in spending on movie purchases, as well as a 29% drop in spending at retail stores such as Blockbuster, which shuttered hundreds of store locations last year as it emerged from bankruptcy reorganization.

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UltraViolet backers get ready to make more noise in 2012
Mon, Jan 9 2012
World's biggest tech show searching for "wow"
Mon, Jan 9 2012
Jan 10 (TheWrap.com) - UltraViolet launched last fall with a murmur, not a roar, but its backers plan to make more noise about the format once hailed as a potential savior to the sagging home entertainment business this year.
Tuesday at CES, backers of the cloud-based platform announced a multi-million dollar awareness campaign and a tentative Amazon deal, while also disclosing the number of accounts that have been activated since its soft launch in the fourth quarter.
Roughly 750,000 UltraViolet accounts have been set up following a modest promotional push. Roughly 20 films have been released in the video anywhere format thus far, with more studios coming on board this year.
To build awareness, the Digital Entertainment Content Ecosystem, the consortium behind the format, said it will partner with the Digital Entertainment Group to create the awareness campaign.
The tagline: "Your movies in the cloud."
In interviews with TheWrap, DECE members said they were enthusiastic about the response among consumers even without heavy marketing.
They believe that UltraViolet is poised to take a big leap in the mainstream, with more retailers, devices and studios ready to come on board in the coming months.
"We see 2012 as being the year when we move from the accomplishments made in 2011 into mass consumer adoption," Mark Teitell, general manager and executive director of the DECE, told TheWrap. "Looking ahead, we're going to have hundreds of titles coming on the market, so we fully expect to see exponential growth."
Teitell said that the number of accounts does not directly correlate with the number of discs sold with UltraViolet. He said more accounts could be set up as disc owners get around to signing up for the cloud-based format in coming months.
The cloud based video-anywhere platform was unveiled just in time for the holidays, but aside from a few mentions in commercials for UltraViolet copies of Blu-rays for such Warner Bros. titles as "Horrible Bosses" and "Green Lantern," it was in essence a soft launch.
Sony and Universal also debuted a handful of titles in the format, but nearly three months after opening, UltraViolet is still not a household word.
Many consumers are still a little hazy on the platform, but in essence it allows users to stream and store movies and TV shows they purchase on multiple devices. The hope is that UltraViolet will tilt the equation back in favor of owning content rather than renting movies and TV programs through Netflix or Redbox.
Although all of the major studios except Disney have backed UltraViolet, it has to move forward without the participation of one massive entertainment provider, Apple and its iTunes store.
To that end, DECE is excited that Amazon has signed an agreement with a major studio that includes granting UltraViolet rights, giving the consortium, an important digital partner. Bill Carr, executive vice president of digital media at Amazon, announced the pact at CES, but did not name the studio or tip his hand about the extent of the online retailer's involvement.
Helping to further compensate for Apple's absence, Samsung is rolling out new features on its Blu-ray players that streamline the process for customers looking to add their discs to the cloud.
Moreover, UltraViolet has taken its first steps toward being global in nature, launching with copies of "Final Destination 5" in the United Kingdom. DECE plans to begin UltraViolet roll-out in Canada in the coming months and other territories in 2012 and 2013.
And an important new studio partner has joined the fray. Paramount has quietly announced that it will launch its first UltraViolet titles, beginning with "Paranormal Activity 3" on November 24, and Fox and Lionsgate are expected to roll out films in the near future.
Though the excitement for UltraViolet is measured, the movie business is likely heartened by the most recent Digital Entertainment Group study that show the smallest slide in home entertainment revenue since 2008.
Though the sector constricted by 2 percent to an estimated $18.04 billion in 2011, there was a 20 percent jump in Blu-ray spending and a 51 percent jump in digital spending. Those two trend lines augur well for UltraViolet and its mission to encourage consumers to keep buying movies for their home libraries -- whether they exist in the digital cloud or in wooden shelf form.
So why not launch with a bigger bang?
Studio executives say that the slow-burning rollout is analogous to Blu-ray, which was launched in 2006 with modest fanfare against the competing HD DVD format. Since then it has grown steadily, if not stratospherically.
"We consciously followed a path to build up an organic and gradual adoption," Teitell said. "We think that as positive word of mouth starts and more studios and more content and more devices come out, we'll start to grow faster. Those things are going to happen as we build more awareness about what UltraViolet does."

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Daniel Frankel Jan 10, 2012 3:56 PM
The Bleeding In The Home Entertainment Business Slowed In 2011

The home-entertainment business has been pummeled in recent years, with revenues falling for seven years in a row, in one year a full 8 percent. But last year, according to the latest numbers from a research group, things brightened slightly, thanks mostly to the rapid growth of digital streaming.
The Digital Entertainment Group, a research consortium backed by Hollywood’s major studios, released data Tuesday showing that overall home entertainment revenue declined only 2 percent in 2011. As shrinkage goes, it was the smallest since 2008 for the challenged entertainment sector, which tallied $18.4 billion in total rentals and sales for the year, according to DEG. That $18.4 billion includes the revenue for everything from DVD and Blu-ray, to cable and satellite VOD, to downloads and streaming, of movie and TV content. Interestingly, in the second half of 2011, the DEG reported that revenue from rentals and sales of “home filmed entertainment,” physical and digital alike, actually rose 1 percent.
Even though the DEG is backed by the studios, its revenue numbers are often cited as official benchmarks of industry performance. According to the DEG, the home entertainment market has declined every year since 2004, when it peaked at $21.8 billion, mainly because of the decline of DVD sales.
One caveat to the latest numbers from the DEG: They were helped by a change in the group’s equation. For the first time, the DEG included revenue from subscription streaming services, which resulted in nearly $994.6 million in additional revenue for 2011.
Overall digital spending for home entertainment – which includes VOD through various carrier services like DirecTV (NYSE: DTV) and Comcast, and electronic sell-through via vendors like Apple’s iTunes – was up 50 percent, according to the trade group, to $3.4 billion.
SEE ALSO: Interview Part 2: Netflix’s Hastings Hurt By Criticism But Over Transition
The kiosk business continued to grow, too, with rentals through outlets like Redbox increasing 31 percent to $1.66 billion. And rentals of Blu-ray and DVD through subscription services like Netflix (NSDQ: NFLX) kept on growing, as well, increasing 4.1 percent to $2.36 billion.
As the studio-backed trade group is prone to do, it touted the performance of high-margin physical media, noting that Blu-ray sales and rentals had increased 20 percent in 2011, reaching $2 billion for the first time.
Still, the market’s legacy revenue streams remain in steep decline. Rental through brick-and-mortar outlets continued to circle the drain, declining 29 percent to just $1.64 billion. And overall sales of “packaged goods” – DVD and Blu-ray – declined 13 percent to $8.9 billion, brought down by the continued cratering of the older format.

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DEG Numbers Are Good News for Home Entertainment

10 Jan, 2012
By: Thomas K. Arnold

Consumer home entertainment spending numbers, released Jan. 9 by DEG: The Digital Entertainment Group, should have Hollywood studio executives jumping for joy.
Sure, total consumer spending on home entertainment for 2011 was down about 2% from the previous year, with a surprisingly strong third quarter followed by a disappointing fourth quarter.
And, yes, spending on packaged media — still Hollywood's bread-and-butter — once again declined in the double digits, albeit not as dramatically as in the last two or three years.
But let's take a big-picture view of what happened. For starters, a 2% drop is virtually inconsequential, given the explosion of the app market in 2011 and all those eyeballs caught up in the novelty of playing Zombie Highway or Tiny Towers on their iPhones and iPads.
What's more, the box office value of movies that came to home entertainment in 2011 was off 8.7%, and that's traditionally been a spot-on indicator of how the home entertainment sector will fare.
As for the decline in packaged-media sales, I wish to make two points: First of all, did any of you happen to wander into a Walmart, Target or Best Buy during the holidays? Recent Blu-ray releases were selling for less than $10, while DVDs could be bought for as little as $3. Heck, I'm surprised consumer spending isn't down a lot more, given the record deep-discounting we saw in the last three months of 2011.
Each year we talk about the "race to the bottom," but based on what I saw on my own excursions to retail land in the weeks leading up to Christmas I fear next year we might find retailers giving consumers free discs just for walking through their doors.
Secondly, consumers are firmly in a state of transition. The movie collecting habit, fueled by the novelty of DVD a decade ago, is definitely waning — a product, I believe, of consumers opening their cupboards and seeing stacks of movies still in their original shrinkwrap. DVD triggered a feeding frenzy, and today, consumers, older and wiser, have simply come to realize they don't need to buy every movie that comes out just because they can.
That's why the biggest gains in 2011 were on the rental side, both physical (kiosks) and digital (VOD). Those gains, in fact, prevented the year from being a disaster, faithfully offsetting declines in sellthrough.
So, in a nutshell, consumers are by no means turning their back on bringing movies into the home. In fact, in terms of sheer transactions, I have a hunch the numbers are up, way up, despite apps, iPads and all the other distractions.
It's just the delivery method that's changing, with consumers opting to watch movies instead of also choosing to own them.
The mainstream media, no doubt, will again zero in on the drop in disc sales and proclaim the home entertainment industry to be at death's door. It's what they do.
But we know better. And if you happen to run into any skeptics, pass this column along to them. A little education never hurt.
Related Links :
DEG: Blu-ray, Digital Helped Lift 2011

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How accurate are the the-numbers.com figures for revenues and unit sales? Particularly for older records?

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Each tracker has their strengths and weaknesses: DEG for accurate long-term figures, HMM for the best possible accuracy in weekly revenues and now total units, The Numbers for the most accurate source for individual top 20 movies, and so on. The different trackers might not agree with each other 100%, but theoretically each is consistent in tracking methods and therefore they are accurate in a relative sense, just not an absolute one.
Depending on what your talking points are, you can always choose the most relevant data possible. It doesn't make someone a cherrypicker, but it can if they're choosing one over the other out of ignorance of the other data.

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Yeah. It could be new Blu-ray owners, or it could be TN were overestimating DVD sales a year ago. But I will give them the benefit of the doubt until proven otherwise. The only thing I look at The Numbers for is the #1 Blu-ray title's DVD unit sales anyway. And if The Numbers' tracking periods haven't changed, then it should still work fine. There would be a slight variable since the HMM index periods are a day less, but I don't see why one day would knock indexes out of proportion enough to invalidate the whole table.

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Yeah. It could be new Blu-ray owners, or it could be TN were overestimating DVD sales a year ago. But I will give them the benefit of the doubt until proven otherwise. The only thing I look at The Numbers for is the #1 Blu-ray title's DVD unit sales anyway. And if The Numbers' tracking periods haven't changed, then it should still work fine. There would be a slight variable since the HMM index periods are a day less, but I don't see why one day would knock indexes out of proportion enough to invalidate the whole table.

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Era of Rental Windows Has Arisen

8 Feb, 2012
By: Thomas K. Arnold
A few years ago, a wise studio executive — the home entertainment unit president of one of the six majors — told me that the industry is heading “to the point where one day, it will be all about windows.”
I think we’ve arrived.
The announcement by Walt Disney Studios CEO Bob Iger plans to impose a 28-day rental delay on new-release disc titles means four out of the six majors are holding back new releases from Netflix and Redbox, the top two rental outlets, in a concerted move to prop up the sellthrough market.
Given past experience, I highly doubt the two holdouts, Sony Pictures and Paramount, will hold out much longer. Sony already delays certain releases.
The strategy underscores the importance of windows and lends credence to the old saying, “timing is everything.”
Formats don’t matter nearly as much as when a movie becomes available on that format. Blu-ray Disc, DVD, download, streaming, VOD, iTunes, UltraViolet — the competition is no longer among formats, but, rather, maximizing the potential of each format through staggered release dates and, when the dust settles, hopefully create a roadmap certain types of movies will follow when their theatrical runs are over.
Redbox and Netflix will likely always be at the proverbial bottom of the barrel when it comes to getting new releases. Vending machines and subscriptions may be a gold mine, but not for the studios.
For Hollywood, the real money lies in getting a share of the spoils from each sale — be it direct dollars, say from each Blu-ray Disc or DVD they sell to Walmart, Best Buy or Target, or lump-sum payments through licensing content for digital distribution.
First Sale is well and good, but the retailers get the prize — which is why studios have never cared for the rental model, not when it was brick-and-mortar nor now when it’s done over the mail or through kiosks. They’re not in control, and when you’re not in control. you’re not sitting in the locomotive of the money train.
Fortunately for the studios, there are all sorts of other distribution mechanisms either available now or in the pipeline, in addition to the good old packaged-media standbys of DVD and Blu-ray Disc.
And if it’s all about windows, there’s nothing Hollywood would like more than to shut the window for good on rental.

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Are Apps the Bane of Kidvid?

15 Feb, 2012
By: Thomas K. Arnold

I feel vindicated. For quite some time I have been maintaining that one reason home entertainment disc sales are slumping is because of iPhone-mania and the preponderance of free apps. Pre-teens, traditionally among the biggest consumers of entertainment, are playing Angry Birds or Tiny Towers instead of watching the latest animated feature on DVD or Blu-ray Disc.
Last October, DreamWorks Animation, which derives more than 50% of its revenue from home entertainment sector, reported a 51% decline in profits.
And my hunch, at the time, was that the iPhone and its larger cousin, the iPad — along with other smartphones and, of course, the iPod Touch — are the culprits.

So now along comes THQ, the venerable video game developer responsible for such hits as Saints Row and Warhammer 40,000, which has just reported dismal financials. The company’s loss mushroomed to $55.9 million in the quarter that ended Dec. 31, 2011, from $14.9 million in the year-ago quarter. Its stock is in danger of being delisted. CEO Brian Farrell is taking a 50% pay cut and, in the latest development, THQ is shutting down its entire Japanese operations.
THQ attributes its woes to a botched attempt to broaden its base from hardcore gamers to the pre-teen set, a move highlighted by the launch of the uDraw Game Tablet and several licensing deals for children’s properties. “Our confidence was misplaced," Farrell said earlier this month, noting that not only is THQ killing the tablet, but it also is pulling out of the entire children’s game business. THQ said it recently ended negotiations with two licensors and is working out agreements with two more to spin off some titles.
One of the primary reasons for the pullout, Farrell said in a conference call earlier this month with analysts to discuss the latest financial results, is that the i-stable of products has taken the kids market by storm in the past year, “since kids can get thousands of apps for free or at low costs.”
If free apps could topple THQ, one of the most successful video game developers of all time, it’s easy to see the danger to our industry, particularly the children’s market, which remains the cornerstone of today’s sellthrough business.
The $64,000 question: Are iPhones and apps just another novelty that kids will eventually tire of, so that they’ll come back to home video? Or are they going, going, gone … for good?

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Kosty,
I don't know why I continue to be fascinated with this, years after the HD-wars are gone, but it IS fascinating reading. Please keep up the great work. You have an appreciative audience!

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thanks!

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