Ahead of next week’s Blu-Con Blu-ray lovefest in Beverly Hills, the Digital Entertainment Group has just released its latest market analysis numbers for packaged media.
According to the DEG numbers, total consumer spending on packaged media through Q3 2010 came to $12.6B, a decline Y-Y of about 4%, while consumer transactions for home entertainment products were flat for the year. Digital distribution, which includes electronic sell-through (up 37% Y-Y) and video-on-demand (up 20% Y-Y), accounted for 13.5% of the total, totaling $1.7B.
Other interesting tidbits: Blu-ray saw its sell-through increase by 80% Y-Y to $1B. I’m not really sure what that number means, because overall packaged media (Blu-ray and conventional DVDs of movies, etc.) sell-through declined by 8% Y-Y, continued a slow and steady decline that started almost five years ago and has shown no signs of abetting.
The DEG states that Blu-ray hardware sales increased 104% Y-Y, with more than three million “set-top units” sold. According to DEG, this brings the installed base of Blu-ray disc playback devices to 21.2 million units in the USA.
Note that a “Blu-ray disc playback unit” obviously includes Sony PlayStation III consoles, but there’s no reliable way to tell how many of those are being used to watch Blu-ray movies.
Conventional packaged media is clearly in decline. Rentrak numbers show that spending on DVD and BD rentals was down 4.4% Y-Y to a total of $4.4B. That number would be a lot worse if not for Redbox and other kiosk rental operations, which saw an increase in revenue of 55% Y-Y.
DEG also went on to say that 98 million Blu-ray discs have shipped to retail so far this year, up 57% Y-Y. But that number doesn’t tell us anything about how many of them have actually sold. (It’s like the early days of DTV, when manufacturers quoted the numbers of TVs shipped to retail, and not the actual sales numbers.)
A few things can be divined from these numbers. First, as I just mentioned, the decline in packaged media sales shows no sign of slowing down, and the Blu-ray format is doing little to stem the tide. That’s been the case ever since the BD – HD DVD format wars were declared over, nearly three years ago.
Secondly, Hollywood may have some major bones to pick with Netflix’ and Redbox’ business models, but it’s these same two companies that are saving the studio’s chestnuts right now. (Forget Blockbuster; they’re preoccupied with Chapter 11 bankruptcy proceedings and arranging temporary ‘debtor-in-possession’ financing just to keep their doors open.)
Finally, electronic sell-through is gaining momentum, even faster than video-on-demand. Customers like the idea of consuming entertainment at home through a high-speed broadband connection, feeding some sort of DVR or streaming in real time at lower resolution. They really don’t care whether they have a physical copy of the movie on a disc, as long as they can get it off a server someplace.
Home theater fans will argue that last point with me, but they’re automatically disqualified from the argument because they constitute a niche and a relatively small percentage of the population – a percentage that studios could never make a sustained living from.
No, the average viewer at home doesn’t care about squirreling away DVDs or BDs and hunting for them on movie night. And that’s been pretty clearly reflected in packaged media rental and sales trends for almost half a decade.
It’s all in how you spin the numbers.
Posted by Pete Putman, October 27, 2010 3:54 PM
About Pete PutmanPeter Putman is the president of ROAM Consulting L.L.C. His company provides training, marketing communications, and product testing/development services to manufacturers, dealers, and end-users of displays, display interfaces, and related products.
Pete edits and publishes HDTVexpert.com, a Web blog focused on digital TV, HDTV, and display technologies. He is also a columnist for Pro AV magazine, the leading trade publication for commercial AV systems integrators.