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Digital Downloads Top $1.5 Billion for First Time for Home Entertainment Industry in 2014

Overall year was down 1.8% for the homevideo industry to earn $17.8 billion in the U.S.

Getting a last minute boost by Sony’s “The Interview,” the electronic sale of movies and TV shows in the United States grew 30% in 2014, to earn nearly $1.6 billion for the first time.

A record year was expected, with studios already seeing signs they would beat 2013’s benchmark of nearly $1.2 billion by the end of the third quarter, according to numbers tallied by the Digital Entertainment Group.

But the holidays proved an even bigger boon for Hollywood, thanks largely to buzz surrounding “The Interview,” and its digital release. In fact, electronic sellthrough spending was up 24% in the fourth quarter, generating $533 million from digital downloads, not the purchase of physical discs on websites.

Overall, total home entertainment spending in the U.S. fell 1.8% in 2014, to $17.8 billion.

DVDs and Blu-rays saw a nearly 11% decline in the year, generating $6.9 billion.

Physical video rental stores lost 27%, to earn $696 million, while revenue for kiosks fell 4% to $1.8 billion in 2014.

Instead, consumers turned to more digital options, boosting spending for key digital categories by double digits.

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Subscription based VOD services like Netflix saw gains of 25% in the fourth quarter, topping $1 billion in revenue, and gained 26% for the year to top $4 billion.

The VOD category, however, was down nearly 6.7% to $1.96 billion, giving cable and satellite providers a reason to promote such services more in 2015.

Top sellers for the year were Disney’s “Frozen,” “Guardians of the Galaxy,” “Thor: The Dark World,” “Captain America: The Winter Soldier” and “Maleficent;” Lionsgate’s “The Hunger Games: Catching Fire,” Warner Bros.’ “The Lego Movie” and “Gravity;” New Line’s “The Hobbit: The Desolation of Smaug;” Paramount’s “Transformers: Age of Extinction;” Universal’s “Lone Survivor,” Fox’s “X-Men: Days of Future Past;” and DreamWorks’ “How to Train Your Dragon 2.”

UltraViolet also continued to gain traction among consumers, with accounts growing 30% last year. There are now more than 21 million accounts set up that have 110 million movies and TV shows in their libraries, combined.

The DEG also likes to keep an eye on hardware in the home, given that’s what home entertainment is played on — especially now that most new devices can connect to the web and to streaming or VOD services.

Overall, there are now 95 million U.S. households with an HDTV, and 70 million with a device, like set-top box or videogame console, that can play a Blu-ray disc.

The DEG reported the year-end figures at the Consumer Electronics Show in Las Vegas.

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