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Digital Sales Show Biggest Home Entertainment Gains in 2013

Digital is helping widen the gap between purchases and rentals for Hollywood homevideo divisions

Hollywood’s home video industry showed significant signs of growth in several categories in 2013, with digital sales of movies and TV shows, in particular, growing by nearly 50% last year.

The industry has rallied around the Digital HD brand to move more titles through e-tailers before the titles bow on DVD or Blu-ray, and the move generated nearly $1.2 billion in revenue from digital sales last year, topping the $1 billion mark for the first time, according to the Digital Entertainment Group.

The figure still trails VOD, which grew nearly 5% to $2.1 billion. But studios have reason to be upbeat after having looked for ways to convert more consumers from renters to buyers.

SEE ALSO: Why Hollywood’s Experiencing a ‘Digital Renaissance’ with Digital HD

Overall, the home entertainment industry saw a slight uptick in sales of 0.72% to $18.2 billion for 2013.

Digital is clearly helping widen the revenue gap between the sale and rental of titles, with purchases at nearly $9 billion versus $6.1 billion for rentals in 2013, according to the DEG.

“Despicable Me 2,” “Twilight Saga: Breaking Dawn – Part 2,” “The Hobbit: An Unexpected Journey,” “Wreck-It Ralph,” “Skyfall,” “Star Trek Into Darkness,” “Monsters University,” “Iron Man 3,” “Man of Steel,” and “The Croods” were among the year’s top-selling movies on home video. The DEG did not break out the top TV titles.

The annual results helped studios stabilize the homevid sector for a second straight year, as consumers are embracing digital platforms, including new ones like Comcast’s new store through its cable boxes and Target’s Target Ticket, along with next-generation videogame consoles from Microsoft and Sony, which were designed as entertainment hubs.

More digital purchases should also help grow UltraViolet, now counting 15 million accounts to use the digital storage locker.

Although the DEG didn’t break out unit sales, spending on Blu-ray discs rose 5% during the year, it said. Still, disc sales declined 8% to $7.8 billion, due to the continued decline of DVD.

There are now more than 72 million U.S. homes with Blu-ray compatible devices.

On the rental side, retail outlets were dragged down by the demise of Blockbuster, with sales off 14% to $1 billion.

SEE ALSO: How Fitting: ‘This Is the End’ the Last Movie Rented from Blockbuster

Kiosks also declined by 1% to $1.9 billion.

Streaming-based subscription services rose a whopping 32% to nearly $3.2 billion in 2013, boosting mostly Netflix’s bottom line. When including disc-by-mail, the category rose 14.5% to nearly $4.2 billion.

Total rental revenue, including VOD, came in at $6 billion, off 5% for the year.

Consumers also purchased more than 38 million HDTVs in 2013, with HDTV penetration now at more than 96 million U.S. households.

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