Overall homevideo yields $18.5 billion

Blu-ray appears to have more life in it than the growth of online video-on-demand services might have the biz believe.

Despite heavily hyped reports that Hollywood’s homevid divisions should say goodbye to DVDs and Blu-rays sooner than later, a new study by Screen Digest has found that sales and rentals of Blu-ray discs far surpassed the growth of Web-based movie and TV show purchases in the U.S. last year.

While VOD sales and rentals grew 21.9% last year, earning $2.3 billion, Blu-ray sales grew 64.2%, while rentals of the discs grew 105.5%.

Overall, the U.S. homevideo market generated $18.5 billion from sales and rentals of movies and TV shows in 2010, Screen Digest said.

While studios are quick to cheer the growth of Blu-ray, the overall homevid biz (disc rentals plus sales) still declined 6.5% last year.

Disc sales fell 3.8%, driven by a 15.6% decline in DVD sales, accounting for a loss of $1.5 billion in earnings for studios, Screen Digest said. DVD rentals fell another 12.4%, a loss of $749 million.

“With consumers continuing to be very cautious in their spending habits, the popularity of the rental model reasserted itself in 2010,” said Tom Adams, principal analyst and director, U.S. Media, for Screen Digest.

And that’s why the online business can’t be ignored.

Not only is it growing, online sales and rentals passed the 10% benchmark for the first time last year, reaching 12.2% of the total homevid market. It represented 9.6% of the market in 2009.

VOD rentals grew 55.7%, while digital sales grew 27%.

Study factors in subscription-based TV rentals offered by cablers, satellite operators and telephone companies as part of online VOD. But “at 88% of the total, physical media continues to capture the lion’s share of the homevideo entertainment market, which is why studios are so focused on successfully transitioning from DVD to Blu-ray,” Adams said.

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