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Blu-ray, Digital Keep 2012 First-Half Consumer Spending Positive

29 Jul, 2012 By: Erik Gruenwedel

Strong double-digit growth of Blu-ray Disc sales coupled with digital distribution helped increase home entertainment consumer spending nearly 1.4% during the first six months of 2012, according to new data from DEG: The Digital Entertainment Group.

Total consumer spending, which includes subscription video-on-demand, topped $8.4 billion compared with $8.3 billion last year.

Blu-ray, spurred by catalog, continued to grow steadily at double-digit rates with consumer spending on discs up 13.3% compared to the same period last year. Catalog titles increased 26%, further cementing the notion that Blu-ray has become the standard in home entertainment.

The DEG did not disclose Blu-ray Disc sales revenue figures. According to Home Media Research, sales of BD movies topped $892 million through the first 25 weeks of the year.

The number of Blu-ray homes continued to rise, with 1.4 million Blu-ray players (inclusive of BD set-tops, PS3s and HTiBs,) sold in the second quarter, bringing the total household penetration of all Blu-ray compatible devices to more than 42.1 million U.S. homes.

Total physical sellthrough, which includes DVD, dipped 3.6% to $3.7 billion from $3.8 billion last year. When factoring in electronic, total sellthough declined nearly 2% to $4 billion from $4.1 billion.

Digital distribution, which includes electronic sellthrough (EST), transactional video-on-demand and subscription VOD services such as Netflix, surged more than 77% to $2.4 billion compared with $1.3 billion last year.

Notably, EST increased nearly 22% to $329 million compared to $270 million last year. Electronic sellthough grew 27% in the second quarter compared with Q2 in 2011. Additionally, transactional VOD was up 11.6% to $983 million compared to $881 million in the mid-year of 2011, including a 17.2% increase in the second quarter compared with Q2 2011.

Subscription VOD revenue topped $1.1 billion, up 430% from $208 million last year.

The rental business — with the exception of kiosks — continued to decline, with total revenue, including VOD, dropping 17.6% to $3.2 billion compared with $3.9 billion last year.

Kiosks, spearheaded by Redbox, grew revenue to $990 million, up nearly 23% from $805 million last year.

Brick-and-mortal video store revenue fell more than 33% to $597 million from $896 million, while by-mail disc rentals plummeted 50% to $671 million from more than $1.3 billion last year.

Cloud-based digital locker platform UltraViolet recently surpassed 4 million household accounts. The growth of UltraViolet underscores the notion consumers are responding favorably to the increased availability of EST, as well as the growing range of UltraViolet services.

Finally, more than 4.6 million HDTVs were sold to U.S. consumers in second quarter 2012; HDTV penetration to date is nearly 80 million U.S. households.

About the Author: Erik Gruenwedel

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