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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.


About the Author: Erik Gruenwedel

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