While home entertainment executives continue to talk up digital downloads of movies and TV shows as a growing, and increasingly lucrative, trend, Blu-ray Discs and DVDs remain the industry’s proverbial cash cow, at least in the sales end of the business.
U.S. consumer spending in the third quarter of 2014 was essentially flat with last year’s third quarter, coming in at an estimated $3.92 billion, down 1.2% from the $3.97 billion consumers spend in the third quarter of 2013, according to numbers released this morning by DEG: The Digital Entertainment Group.
In the first nine months of this year, consumers spent an estimated $12.5 billion on bringing entertainment into their homes and various mobile devices, a decline of less than 1% from the $12.62 billion they spent in the first nine months of last year.
As expected, disc sales continued to fall, with consumer spending on Blu-ray Discs and DVDs combined down 8% in the quarter, to $1.33 billion from $1.45 billion, and 8.2% for the year through Sept. 30, to $4.6 billion from $5 billion.
Electronic sellthrough (EST), known as Digital HD, rose 26% in the quarter and 33% in the first nine months of 2014. But total spending – $347 million in the quarter and $1.02 billion for the year through Sept. 30 – remains a small percentage of total sellthrough spending and wasn’t enough to lift the category into positive territory. For the first nine months of this year, EST accounted for just 18% of total consumer purchase dollars, while discs accounted for 82% of the total sellthrough pot.
DEG numbers show that the total amount of money consumers spent in the quarter on buying filmed entertainment – on disc and digitally – slipped 2.5%, to $1.68 billion from $1.72 billion in the third quarter of 2013. For the year through Sept. 30, consumer sellthrough spending was down 2.7% to $5.61 billion from $5.77 billion in the first nine months of last year.
The DEG did not break out Blu-ray Disc sales from overall physical media sales.
Consumer spending on subscription video-on-demand – such as Netflix streaming – rose more than 26% in the first nine months of 2014, to $2.94 billion from $2.33 billion in the comparable period last year. Transaction video-on-demand (VOD), meanwhile, was down nearly 7%, to an estimated $1.45 billion from $1.56 billion. Total digital spending – on subscription VOD, a la carte VOD and EST – was up 16.3% to an estimated $5.4 billion from $4.65 billion, DEG numbers show.
The biggest loser was again traditional disc rental at physical video stores, which declined 32% to an estimated $517 million in the first nine months of this year from $760 million in the same period last year.
Disc rentals at Redbox vending machines and other kiosks was off 5.9% in the first nine months of this year, to $1.34 billion from $1.43 billion. The drop was even more significant in the third quarter: business was down 11.5% to $418 million from $472 million in the third quarter of 2013.
Thomas K. Arnold is editorial director of Home Media Magazine.