DVD, Blu-ray Spending Slips 5.5%: DEG

By Alan Wolf -- TWICE, 1/26/2009

LAS VEGAS — Sales and rentals of DVDs and Blu-ray Discs fell 5.5 percent last year to $22.4 billion, approaching levels last seen in 2003 for home-entertainment software.

According to data released this month by the Digital Entertainment Group (DEG), a 178 percent increase in spending on Blu-ray discs, to $750 million, could not offset a 7.3 percent decline in sales and rentals of DVD software, which totaled $21.6 billion in 2008.

Sales of DVDs declined 9 percent to $14.5 billion and rentals were flat at $7.5 billion, DEG said. Nevertheless, some 25 million DVD players were sold in the United States last year, according to DEG estimates based on CEA data.

In contrast, retail shipments of Blu-ray discs soared 251 percent to 63.1 million units year-over-year, with a total of 9.6 million playback devices sold in the two years since the platform’s introduction, the Hollywood trade group said.

Speaking at the group’s annual International CES reception at the Bellagio hotel, Bob Chapek, DEG chairman and president of Walt Disney Studios Home Entertainment, acknowledged that the entertainment industry “has shared in the challenges” of the economic crisis, but pointed to three “bright spots … that will provide significant growth over the next decade.” They include:

the end of the high-definition disc format war;
broad studio participation in digital distribution schemes; and
the advent of 3-D TV, which can be offered via Blu-ray discs.

Separately, DEG presented Best Buy, Amazon.com and Sixth Avenue Electronics with Retailer of the Year awards. Best Buy was once again named National Retailer of the Year for Hardware while Sixth Avenue was voted Regional Retailer of the Year for Hardware for the second consecutive year. DEG members cited the chains’ leadership in consumer education of new entertainment technologies through product demonstrations, promotions and key advertising.

First-time recipient Amazon.com was awarded Retailer of the Year for Software, with members citing the e-tailer’s dedication to software on Blu-ray, SD, disc-on-demand and electronic delivery.