Low Box Office Blamed for Disc Spending Drop

2 May, 2011 By: Thomas K. Arnold

A staggering drop in the box office value of movies that came to Blu-ray Disc and DVD is being blamed for a nearly 10% drop in consumer spending on home entertainment in the first quarter of 2011, according to numbers released today by DEG: The Digital Entertainment Group.

Consumer spending for the quarter is pegged at less than $4.2 billion, a 9.8% drop from the $4.64 billion that consumers spent on home entertainment during the first three months of 2010.

The combined box office earnings of films that came to disc in the first three months of this year was down 25% from the value of films that came to disc in the first quarter of 2010, DEG reports.

Disc sellthrough to consumers was off nearly 20%, from nearly $2.6 billion in the first quarter of 2010 to $2.07 billion in the first quarter of 2011, due chiefly to the lack of tentpole releases this quarter. The first quarter of 2010, by comparison, saw four blockbuster theatricals come to disc, led by Summit Entertainment’s The Twilight Saga: New Moon, the second film in the hugely successful “Twilight” franchise that earned nearly $300 million in U.S. theaters alone. In addition, Easter, which typically generates a spike in disc sales, was later this year, whereas in 2010 the holiday came in early April, enough to have an effect on retail purchasing.

Despite the down box office value, Blu-ray Disc spending actually rose in the first quarter of 2011, with consumer spending up 10% from the first quarter of 2010, according to DEG, whose numbers are based primarily on studio input and Rentrak Corp. rental estimates.

Sales of Blu-ray Disc players, including standalone set-tops, PlayStation 3s and home theater systems, rose 13% in the quarter. The DEG estimates nearly 30 million U.S. homes now have some form of Blu-ray Disc playback device.

Rental spending remained essentially flat, although if streaming and video-on-demand are included, the dollar total is up 2.5% from the first quarter of 2010. The DEG estimates rental spending at just under $1.98 billion, up from $1.93 billion in the first three months of last year.

Traditional rental spending at brick-and-mortar video stores was down 36%, while subscription rental, including both disc and streaming, was up 33%. Disc rentals at kiosks were up nearly 31%.

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