IHS: Digital the Backbone of Home Entertainment Revenue Going Forward

6 Oct, 2014 By: Erik Gruenwedel

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Digital purchases to grow 75% through 2017

Growth in subscription streaming (Netflix, Amazon Prime Instant Video, etc.), transactional VOD and electronic sellthrough will increasingly underscore total consumer spending from traditional home entertainment sources, including packaged media, according to analysis released at the recent PEVE Entertainment Business conference in London.

According to IHS, digital purchases are set to grow by 75% through 2017. In terms of worldwide consumer revenue, IHS forecasts that digital movie purchases will reach $2 billion by 2018.

Indeed, total U.S. home entertainment spending through June 30 topped $8 billion, according to DEG: The Digital Entertainment Group. Consumer spending on Blu-ray Disc and DVD declined 8.2% to $3.2 billion from $3.5 billion in the first half of 2013. Electronic sellthrough — buoyed by early availability — rose 37%.

“As physical rentals and purchases decline, the home entertainment revenue stream will rely more and more on the growth potential of the digital space,” Dan Cryan, senior director of digital media at IHS Technology, told attendees, which included representatives from the major U.S. studios.

Similar to foreign box office growth, IHS said major media companies such as Google and Apple are expanding their digital storefronts — Google Play and iTunes — internationally. Google Play movies are now available in Central Asia and Korea and iTunes is extending its reach into Egypt, Saudi Arabia, Oman, South Africa and Mozambique, according to the research firm.

In addition to digital sellthrough, IHS said media companies are innovating the ecommerce home entertainment experience to include catalog movies and pre-order movie sound tracks, among other content offerings.

“The digital content store page is changing,” Cryan said. “If ecommerce can extend the kinds of content types offered and include content, such as apps, they are likely to see increased sales.”

 

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