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NPD: Movie Downloads Not Soon Overtaking Packaged Media

By Erik Gruenwedel | Posted: 16 Sep 2008

Underscoring the resilience of packaged media, the average U.S. consumer spends $8 of every $10 of his or her entertainment budget buying or renting DVDs, according to a new report from The NPD Group.

The study, presented Sept. 16 at the DisplaySearch HDTV 2008 conference in Los Angeles, found that just 0.5% of Americans’ movie budget is spent downloading or streaming movies and TV shows from the Web.

The results, based on a sample of more than 11,000 consumers, demonstrate that unlike the music industry, consumers still prefer packaged media when it comes to watching Hollywood movies in the home.

“Everyone is guessing when video on demand (VOD) and digital downloads will spell the end for packaged media,” said Russ Crupnick, senior industry analyst for entertainment with The NPD Group. "At this point, digital video is still an extremely small part of overall consumer entertainment spending."

Specifically, the report found that 41% of dollars budgeted for movies and video was spent on DVD movie purchases, 11% for purchases of TV programs on DVD, and 29% on DVD rentals (including Netflix, Blockbuster Online and other video-subscription services). In addition 18% was spent on movie tickets.

When asked how they watched a full-length movie in the past three months, 67% of respondents said they viewed a DVD they owned, while 50% watched a rented DVD and 18% opted for a VOD movie.

Another 8% said they viewed movies on portable media devices, while 6% downloaded a movie from a free file-sharing service and watched on a computer or TV. Just 2% paid for a digital video download from the Web; however, more than half (52%) reported visiting sites such as YouTube to watch streaming video.

Crupnick said the near-term talk of a digital revolution in movie distribution is overblown. But, as witnessed in music, new content delivery vehicles can take root among consumers quickly, he said.

“That's why many home video companies are aggressively pursuing digital strategies,” he said. “The inflection point will come — it's just not coming tomorrow.”


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