DEG: Q3 Home Entertainment Spending Up 5%31 Oct, 2011 By: Erik Gruenwedel
Spurred by a 52% year-over-year increase in households with Blu-ray Disc players, consumer spending on home entertainment increased 5% in the third quarter (ended Sept. 30) — the first quarterly increase of home entertainment spending since the first quarter of 2008, according to the latest data from DEG: The Digital Entertainment Group.
Blu-ray-enabled households now total 33.5 million, with consumer spending on the high-definition packaged-media format up 58% in the quarter, compared with the same period last year. The surge is due in part to a 60% jump in sales of catalog Blu-ray releases, led by Star Wars, Citizen Kane, Scarface and The Big Lebowski, among others.
Electronic sellthrough of new-release movies increased 13% in the quarter.
Overall, sellthrough for DVD and Blu-ray movies declined 4% to more than $1.7 billion, compared with $1.8 billion last year. When combined with electronic sellthough, sales of movies dropped less than 3% from the same period last year.
In addition to electronic sellthrough, transactional video-on-demand increased nearly 5% to $419 million, compared with $400 million last year. Subscription streaming revenue topped $255 million.
Traditional brick-and-mortar video store rental revenue dropped more than 28% to $353 million from $495 million last year. It marks the first time that transactional VOD revenue surpassed traditional video store rental revenue. At the same time, subscription rental of DVD and Blu-ray increased nearly 5% to $607 million from $579 million. Kiosk revenue, which includes Redbox and Blockbuster Express, surged 23.3% to $414 million, compared with $335 million last year.
Total rental revenue, excluding VOD, declined 2.4% to $1.37 billion from $1.4 billion. With VOD, total rental revenue declined less than 1% to $1.79 billion from $1.8 billion.
Through three quarters, packaged media sellthrough is down more than 14% to $5.6 billion compared to $6.5 billion last year. That percentage declines slightly to 13% when including electronic sellthrough. Through nine months, kiosk revenue surged more than 33% to $1.2 billion from $912 million, followed by subscription rental (up almost 19%) to $1.9 billion. Transactional VOD revenue is up more than 4% to $1.3 billion from $1.2 billion last year; while EST is up nearly 7% to $406 million.
Notable downward trend: Brick and mortar rental, which has seen revenue plummet more than 28% to $1.2 billion from $1.7 billion last year.
Heading into the all-important fourth quarter, the DEG is confident that theatrical blockbusters entering the retail channel, including Captain America: The First Avenger, Cars 2, Cowboys & Aliens, The Hangover Part II, Harry Potter and the Deathly Hallows — Part 2, The Help, Kung Fu Panda 2, Rise of the Planet of the Apes, The Smurfs and Water for Elephants, will continue the positive trend into 2012.