Home Entertainment Spending Dips 1.8% in Q1

TV digital advertising spending

Buttressed by subscription streaming, consumer spending on home entertainment topped $4.55 billion in the first quarter of 2016, down 1.8% from $4.64 billion in spending during the prior-year period, according to new data from DEG: The Digital Entertainment Group.

Subscription streaming, spearheaded by Netflix, Hulu and Amazon Prime Video, topped all digital spending at more than $1.4 billion, up 19% from $1.18 billion a year ago. Transactional VOD rental spending increased 7.3% to $561 million, from $523 million a year ago, while Digital HD increased 4.4% to $505 million, from $484 million. DEG said digital sales were impacted by a smaller new-release slate, but continues to see strong growth in catalog titles.

Packaged media sales declined 13.2% to $1.38 billion, compared with $1.58 billion a year ago, reflecting ongoing secular changes in content-ownership patterns.

Meanwhile, more than 1.5 million 4K Ultra HD televisions sold in the quarter, up 210% from same period a year ago. The total number of 4K TVs sold to date tops 7 million, according to the DEG. With 26 Ultra HD Blu-ray releases available for first time in the quarter, consumers purchased more than 80,000 units during the first weeks of release — twice the number of Blu-ray Discs sold during the HD format’s first weeks of release in 2006.

The trade group estimates that nearly 95% — 104 million — of all U.S. homes have at least one HDTV. Blu-ray playback devices including set-tops and game consoles are in more than 84 million U.S. households.

Traditional video store rental spending fell 17% to $140 million, from $169 million, while by-mail subscription rental (from services like Netflix and GameFly) dropped 16% to $148 million, from $177 million. Kiosk rental spending, led by Redbox, declined 20% to $409 million, from $512 million.

Erik Gruenwedel is news editor of Home Media Magazine.