Spending for DVDs and Blu-ray discs is falling so fast that 2012 likely will be first year when consumers will pay more to buy and rent movies via the Internet, according to a report today from IHS Screen Digest Video Intelligence Service. The research firm says that the average household will spend $123.50 to buy and rent discs this year — down from $133.21 last year and $149.53 in 2010. The average home spent $206.78 in 2006, when Blu-ray discs were introduced. Looked at another way, people spent $8.8B last year to buy packaged videos, down 12% vs 2010. That will keep falling to $5.4B in 2016 — which IHS notes is “the level in 1997 when DVDs were first launched.” Meanwhile, consumers paid $5.7B to rent discs last year, down 7.3%. Much of that drop was due to the cut backs at Blockbuster, as well as the snafus at Netflix’ DVD rental business. With that largely behind us, and rental kiosks becoming more popular, disc rentals will increase slightly to $6B in 2016. IHS says that kiosks accounted for 34% of disc rental spending last year, and will grow to 41% this year, and hit 52% in 2015. The silver lining for studios is that the online business is growing. “If revenue were to be added from other viewing options such as video-on-demand, Internet-based sales and rentals, and subscription streaming from providers like Netflix and Hulu Plus…consumer spending across all outlets of home video would amount to nearly $17.2B,” says IHS senior analyst for U.S. video Michael Arrington. In a separate report, IHS said that spending for online movies more than doubled to $992M last year, mostly due to the growth of Netflix’s streaming service — which passed Apple to be the No. 1 online movie provider. Web spending is expected to double again this year but then slow, the company says, unless a company such as HBO offers a standalone streaming service or someone offers a Web-based replacement for pay TV.


I have been saying this for years. No one really wants physical product all over their house when they can VOD!
You couldn’t be more wrong.
And you have been wrong for years too. Physical product is paid only one time yet VOD is multiple times over the life of the physical product. That will be much more attractive in the long run than the more expensive alternative.
You’re wrong. VoD sucks. Once I buy a film I want to have it forever (which DVDs allow) not for a week or as long as I subscribe to a certain service. Another problem with vod is that studios try to get more money for their film by selling exclusive rights to only one vod service. I don’t want to have to sign up to five f***ing websites so i can watch any film I like so I’ll just get the dvd from Amazon instead and I’ll get to keep it and watch it as many times as I please. Plus dvds have extras and featurettes.
“no one”??? Speak for yourself. Millions of people still buy discs…I am one of them. And we will continue to do so for decades. I like streaming…it IS convenient. However, for me, nothing matches the incredible picture quality blu ray affords. Streaming is a nice companion to owning BLU, but for me will never replace BLU.
I hate it when idiots speak for everyone else. Speak for YOURSELF and not everyone else. I love physical media…and apparently, millions of others still do. Streaming is nice, but it doesn’t hold a candle to the stunning picture quality a BLU RAY has to offer. If I’m going to watch Alien on my 50 inch plasma, I’m going to make sure I’m watching it with the best possible picture quality and sound.
Wrong, Anonymous! Most people don’t want physical product. There a lot of people who still want superior HD content and special features on Blu-Ray disc and don’t want a movie to disappear from their library because their computer crashed or a provider lost the studio license. You own it on disc, you have it for the next five decades at least. And nothing online will compare to owning the digibook to a classic movie with copious special features. Sure, the packaged goods market is eventually going to drop back to laserdisc levels, but your grand pronouncement about the death of physical product is simply wrong…
You see Anon, as Carson pointed out, people don’t buy DVDs because they want a physical product but because they can OWN the film and have a better quality version of it with extra features.
The problem with streaming media is the QUALITY is not as good as SD DVD and no where near the quality of Blu Ray DVD’s. Streaming is easier and cheaper and that’s why it will win. Quality will suffer
I think the demand for physical copies will diminish, but there will always be a sizeable group who want to collect their favorite films. Packaging and extras will be key to holding this market.
The studios don’t give a damn if you prefer physical or digital media. They going to provide you with whichever product makes most economic sense for them… and in that matchup, the winner is clearly going to be digital.
These are all projected figures. Meaningless. What’s next, a story on this fall’s weather?
Blu-Ray is wildly superior to streaming. So it’s not going anywhere.
People speculating that physical media is going away very clearly do not understand the market. Physical media will go away the day books are no longer sold – in other word, this won’t happen in your life time, and well after that.
so it’s clear: there are 2 revenue streams here. One will continue to shrink while the other grows. But don’t worry DVD fanboys, you’ll still get your marketshare, it’ll just cost you more.