So much for the high-def discs that studios once hoped would revive home entertainment. Consumers bought about 124M Blu-ray discs in the U.S. last year, + 4.2% vs 2012, research firm IHS Technology reports this morning. But with prices falling, consumer outlays only increased 2.6% — not nearly enough to compensate for the 13.6% drop in DVD sales. If the trend continues, then it could result in “a downward turn in spending for the [Blu-ray] format in 2014,” says Senior Analyst Michael Arrington. “In any case, any reasonable amount of growth in Blu-ray is unlikely to prevent what will next year become a decade of decline for a once-thriving disc market.” IHS says that total spending on home entertainment sales and rentals increased 0.7% to $18.29B in 2013, a slower pace than in 2012 when the total was +3.1%. (The market peaked in 2004 at $21.9B, when discs accounted for 96% of home entertainment spending.) The results are especially disappointing, Arrington notes, considering that “2013 was another record year for the theatrical box office.” Disc sales fell 9.3% to $7.47B while disc rental spending declined 8.8% to $4.27B. That was slightly outweighed by increased Internet business. Movie and TV online sales were +38.7% to $1.31B, with rentals +39.6% to $600M, and subscription revenues +31.4% to $3.17B. Pay TV video on demand was up 0.7% to $1.48B.
Consumers spent $5.65B renting DVDs and Blu-ray discs in 2011, Rentrak says this morning citing data from its Home Video Essentials tracking service. That’s down 3.4% from 2010. But consumer defections from disc rentals appear to be accelerating. In the last three months of the year, rentals were -21.3% from the same period in 2010, as business at kiosks — including Redbox, which charges $1.20 a night — grew by 28%. “People have many choices when it comes to renting videos, for both digital and physical media, so it’s interesting to see DVD and Blu-ray Disc rentals are still the number one choice for consumers,” said David Paiko, Vice President of Home Entertainment at Rentrak. The company says that Summit’s Red was the most rented title on DVD and Blu-ray at bricks-and-mortar stores, but it didn’t provide sales data.
The industry’s Digital Entertainment Group credits a 58% gain in spending on Blu-ray discs vs last year’s 3Q and a 12.8% pickup in electronic sell-though (to $135.9M) for much of the gain in 3Q consumer spending, to $3.93B. The 4.9% improvement in total sales was “a major milestone,” DEG says, because “this is the first time spending has increased since the first quarter of 2008, when the economic downturn began.” This also was the first time DEG broke out spending numbers for subscription streaming services such as Netflix, formerly folded into the tally for rentals: They accounted for $255.4M in the quarter and $463.6M for the first half of 2011. But the results show that DVD sales continue to plummet: The huge gains for Blu-ray weren’t sufficient to stop the decline packaged goods sales, down 4% to $1.74B. Over in the rentals, subscription services for discs — again, like Netflix — led the pack (+4.9% to $607.3M). But video-on-demand came in second (+4.9% to $419.9M), followed by kiosks (+23.3% to $414M) and bricks-and-mortar stores (-28.6% to $353M).
Nobody has found a way to squeeze more cash out of a film franchise than George Lucas has done with Star Wars, and he’s at it again. Here’s a trailer for the release of the six films on Blu-ray. I caught the bug on the original trilogy that was far ahead of its time, but I found the prequel uninteresting compared to films like The Matrix, the first of which was released around the same time as that first prequel. Still, Lucas is serving up 40 hours of extras in these releases. But does anyone other than the hardcore geek really care?