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Report: Blu-ray to Top 50% of Video Sales by 2014

6 Jul, 2011 By: Erik Gruenwedel

Packaged media sales holding ground against rental and encroaching digital content in video, games and music

Blu-ray Disc movies and related content will represent more than 50% of packaged media sales in 2014, according to a new report.

London-based Futuresource Consulting said sellthrough -- not discounted rentals (kiosks and Netflix) -- would generate 70% of disc spending by consumers, compared with 13% in 2010. The report projects continued interest by consumers in owning packaged media, compared with rental and digital.

“In 2010, packaged video generated $42 billion globally, and although decline is apparent in the video industry, packaged [media] will continue to produce significant revenues in the coming years with spending still at $33 billion in 2014, and accounting for 72% of total consumer spend,” said Mai Hoang, senior analyst with Futuresource Consulting.

Indeed, the resurgence of rental since last year remains a regional phenomenon, globally speaking, with more than 50% of consumers renting movies in Japan (less so in North America), compared with just 10% in Western Europe.

While Blu-ray continues to gain traction, it will not be enough to compensate for the decline in DVD, according to the report. As a result, growth in home entertainment will come from digital distribution, including transactional video-on-demand and subscription VOD. Key challenges for digital video include the wide availability of related online content, in particular user-generated free content and the ongoing consumption of illegal video.

“An estimated 400 billion videos were watched online last year in the U.S., most of which were viewed for free via services like YouTube and Hulu,” Hoang said. “In Western Europe, paid online video accounted for just 2% of total video spend and 5% in the U.S., but the market is gaining ground and expected to increase to 12% and 16% respectively by 2014.”

Indeed, Futuresource said consumer spending on digital content across video (including paid online and pay-TV VOD), gaming and music would total nearly $52 billion by 2014, accounting for 46% of total global spend across packaged and digital media. This compares with 24% total global spending in 2010 — underscoring that the $113 billion home entertainment industry is steadfastly transitioning toward digital, despite challenges.

“For digital, the online user experience needs to be as seamless and enjoyable as possible for the video industry to maximize the future opportunities and make this revenue stream really perform,” Hoang said.


About the Author: Erik Gruenwedel

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