MFDigital CD DVD Information Library
Tuesday, April 27, 2010
Bluray Consumer Video Spending on the Increase
Despite a promising March, in which sell through spending was up 4% and overall consumer spending on home entertainment rose 2%, the lingering effects of the recession continued to make consumers more watchful of their expenditures in the first quarter of this year.

Total consumer spending on Blu-ray Disc and DVD purchases and rentals, as well as digital delivery, is estimated at $4.8 billion, down 8% from the first quarter of 2009, according to numbers released April 15 from DEG: The Digital Entertainment Group. Conspicuously absent from the latest DEG report is transaction data. Last year, consumer spending was down 5%, but transactions were up 2.8%.

The bright spot for home entertainment in the first quarter of 2010: a sharp rise in consumer spending on Blu-ray Disc, with sellthrough up 74% and rental up 36%, according to the DEG, which compiles its numbers each quarter with input from all the major studios. The software gains were accompanied by a 125% growth in Blu-ray Disc hardware sales in the quarter, the DEG said. Digital delivery, too, rose 27% in the first quarter of 2010 from the year-ago quarter, growing to $617 million.

“We are still facing a challenging environment but are very pleased to see positive indicators of stabilization in our overall business,” said Warner Home Video president Ron Sanders, also president of the DEG. “We are encouraged to see consumers continue to realize the tremendous value of Blu-ray and growing more comfortable with digital delivery.”

The rental business, which last year remained surprisingly stable, took a significant hit in the first quarter of this year, largely because of the rash of store closures from troubled brick-and-mortar chains Blockbuster and Movie Gallery. Citing the Rentrak Corp.’s Home Video Essentials, the DEG said rental spending fell 14% in the three months ending March 31 from the first quarter of 2009.

Overall sellthrough spending fell 11% in the quarter. The DEG didn’t break out DVD sellthrough, but according to Home Media Magazine market research, consumer spending on DVD purchases was down 16% in January and February from the same months last year, due largely to the boost in DVD sales that occurred in early 2009 because of the Circuit City liquidation, which flooded the market with cheap discs. March was rebound month, with gains in both sellthrough and overall consumer spending, a remarkable 124% rise in Blu-ray Disc sales and a 35% uptick in digital delivery transactions. Credit, at least in part, goes to the Easter holiday.

Recent moves by three of the six major studios to impose a month-long window on new releases coming to the rental market are expected to boost DVD sales, with a minimal impact on the rental business. Indeed, some observers believe the rental window, which applies only to Netflix and Redbox, will grow the business. Consumers who want new releases as soon as they come out will have to shell out more money to buy them, while fans of renting movies will simply rent something else instead of foregoing the experience altogether.

The health of the Blu-ray Disc market is underscored by the fact that during the quarter, more than 34 million discs were shipped to retail, 72% more than during the first quarter of 2009, according to figures compiled by Swicker & Associates on behalf of the DEG. More than 18 million U.S. homes now have some sort of Blu-ray Disc playback device, either a set-top machine or a PlayStation 3 console. Meanwhile, Consumer Electronics Association (CEA) data shows that consumers bought 4.7 million HDTVs in the quarter, bringing the total number of sets sold to consumers to 75 million. About 50 million U.S. households have at least one set, and 34% of all HDTV owners have two or more sets.

Source: Home Media Magazine

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