×

Home Entertainment 2016 Figures: Streaming Eclipses Disc Sales for the First Time

If the studios are looking for a fresh reminder of their pressing need to adjust theatrical distribution windows, the figures released Friday on U.S. home entertainment spending for 2016 are just the thing.

Two unprecedented trends emerged in the annual numbers reported by the Digital Entertainment Group, a trade org that collects the numbers from studios and retailers on a quarterly basis, that cast a dark cloud over the future of ownership of packaged video content, both physical and digital.

The first is that disc sales were eclipsed by subscription streaming numbers for the first time ever. The $5.4 billion in disc sales fell well short of the $6.2 billion tabulated from SVOD providers like Netflix.

The high margins of disc sales, which are traditionally the biggest revenue stream for what the DEG describes as “U.S. home entertainment spending,” had been a big but rapidly declining contributor to studios’ bottom lines.

Disc sales were down nearly 10% versus 2015 while subscription streaming surged almost 23%. Interestingly, however, the latter figure represents a cooling off from back-to-back 25% levels of growth in this category going back to 2014. While that might represent a maturation of SVOD consumption in the U.S., the reporting of this category by the DEG is likely dramatically undercounting considering the figures do not include what is probably the second biggest revenue contributor to subscription streaming, Amazon Prime.

However, that SVOD is among the revenue streams counted by DEG as U.S. home entertainment spending at all has always been a source of criticism for several reasons, primarily because disc revenues are being cannibalized precisely because of subscription streaming, which provides a much lower margin to the studios.

DEG tried to put a positive spin on the numbers by noting that the total U.S. home entertainment spend is up 1.36% to $18.3 billion versus 2015, which saw a lesser increase over 2014. But when subscription streaming is pulled out that number falls to just over $12 billion–a 6% decrease versus the previous year.

The second big change in this year’s numbers may be even more disturbing to the studios. For the first time ever, spending on electronic-sell-through, or EST, which totaled just over $2 billion, was edged by VOD by just $67 million.

Once propelled by the push of an early window marketed in recent years by the studios as Digital HD, EST platforms like iTunes grew just 5.4% over 2015–a dramatic drop from the  18% growth of 2015 and 30% rate of 2014.

EST was supposed to be the place where the industry converted former fans of discs to a style of digital ownership where viewers could easily download titles from the cloud through initiatives like the Ultraviolet system. But the growth of VOD is a sign that the rental model for single title transactions is persevering on digital too.

DEG also touted the growth of 4K HD products and named “Deadpool,” “Finding Dory” and “Zootopia” among the hottest selling titles of the year, but did not provide specific numbers.

The declining home entertainment industry has been cited by studio chiefs recently as an impetus to reconfigure how quickly theatrical movies segue to availability in U.S. homes via streaming.

 

 

More Digital

  • apple AR patent application

    Apple Patents Gesture, Expression Tracking for Mixed Reality Headset

    Apple’s upcoming mixed reality headset could include a number of sensors to track the eyes, gestures and even facial expressions of its users. The company applied for a patent to track these kinds of inputs, and combine them with information gathered from outward-facing sensors for mixed reality experiences. The patent application in question, simply titled [...]

  • Natalie Portman Thor Comic Con

    Comic-Con: Marvel 'Shock and Awe' Strategy Dominates Twitter Buzz

    Disney’s Marvel Studios handily won the hype trophy from this year’s Comic-Con International San Diego. Marvel Studios — which returned to the 2019 Comic-Con stage with a chock-full Phase 4 slate of announcements — dominated the discussion on Twitter out of the convention, capturing the biggest volume of buzz for nine of the top 10 [...]

  • Nigeria’s Kunle Afolayan: African Audiences Shouldn’t

    Nigeria’s Kunle Afolayan: African Audiences Shouldn’t Be ‘Second-Class’

    DURBAN–A young boy from a middle-class home gets an unconventional schooling in the ways of the world when he’s forced to apprentice at a mechanic’s workshop in a rough-and-tumble section of Lagos. “Mokalik” is the latest feature from Kunle Afolayan, a leading figure in the wave of filmmakers revitalizing the Nigerian film industry. The film [...]

  • SAG-AFTRA HQ

    SAG-AFTRA Ends Long Strike Against Ad Agency Bartle Bogle Hegarty

    SAG-AFTRA has ended its 10-month strike against Bartle Bogle Hegarty after the advertising agency agreed to sign the union’s new commercials contract. The union instructed its 160,000 members in September not to accept any work for BBH, which had been signed to SAG-AFTRA’s commercials contracts since 1999. The strike came two weeks after BBH publicly [...]

  • FaceApp is displayed on an iPhone,

    SAG-AFTRA Warns Members About FaceApp Terms of Use

    SAG-AFTRA is warning its 160,000 members about the “overreaching and invasive” terms of use for the FaceApp mobile application. FaceApp, developed by Russian company Wireless Lab, uses neural network technology to automatically generate transformations of faces in photographs. The app can be used to make users appear older, younger, or change gender. The terms include [...]

  • J. Cole

    Apple Music Launches 'Rap Life' Playlist

    Apple Music announced the launch of “Rap Life,” a new global playlist focusing on contemporary rap artists and culture. It replaces the former “The A-List: Hip-Hop” playlist. Said Ebro Darden, Apple Music’s Global Editorial Head of Hip-Hop and R&B: “We flipped it to dig deeper into into the lifestyle [and to] keep pushing the culture [...]

More From Our Brands

Access exclusive content