Blu-ray Tops DEG Growth Leaders
By Greg Tarr -- TWICE, 1/18/2010
LAS VEGAS — The Digital Entertainment Group released numbers at International CES showing that the home entertainment market remained stable in 2009 at $22.8 billion in U.S. consumer spending on all prerecorded content, down 5 percent.
Segment growth leaders included Blu-ray Disc, with annual software sales and rental transactions hitting $1.5 billion for the first time, the group said.
Numbers reported to the DEG from all major studios indicated that Blu-ray Disc continued to see growth through the end of the year, with software sell-through up 70 percent and rental up 48 percent.
In the fourth quarter, Blu-ray Disc sales tallied more than $500 million, representing 13.4 percent of all sell-through sales, compared with 8 percent for each of the prior three quarters.
Blu-ray new release sales in the fourth quarter rose 17 percent while catalog title sales doubled from a year ago.
In hardware, the DEG estimated that the number of Blu-ray playback devices in U.S. households rose to 17 million in 2009, up 76 percent compared with year-end 2008.
“The home entertainment business is doing remarkably well given the overall economic environment,” stated Ron Sanders, Warner Home Video president and DEG president. “We have seen tremendous growth in both Blu-ray hardware and software, consumer transactions are up, and we are looking forward to seeing some stabilization in the packaged goods sell-through business in the coming year.”
U.S. consumer transactions for prerecorded content increased 2.8 percent to 3.5 billion units over the prior year, indicating a continued consumer demand for home entertainment products, the DEG observed.
Although consumer spending for home entertainment was down 5 percent for the year, sales in the general retail sector decline 6.3 percent in total retail sales, according to Wells Fargo Securities.
“With Blu-ray titles topping $1 billion in sales and Blu-ray hardware now in 17 million U.S. homes, the format is well on its way to mainstream consumer adoption,” stated Bob Chapek, DEG chairman and Walt Disney Studios distribution president. “With the industry's recent finalization of 3-D specs, next year promises to be an extraordinary year for consumers to experience the expanded possibilities of Blu-ray.”
Rental spending rose 4.2 percent to $6.5 billion for the year, according to Rentrak's Home Video Essentials. Total annual spending on sell-through of Blu-ray Disc and DVD was down to $14.2 billion.
An increase in digital homes and the broader availability of day-and-date video-on-demand (VOD) stimulated the growth of digital distribution in 2009, with consumer spending on electronic sell-through (EST) and VOD up a combined 32 percent to $2.1 billion, according to the DEG. Further, VOD growth accelerated 63 percent in the fourth quarter versus 20 percent in each of the previous three quarters.
The group said consumers are taking advantage of the bonus Digital Copy content included on some releases, with redemptions as high as 20 percent on hit titles such as “X-Men Origins: Wolverine” (Twentieth Century Fox Home Entertainment), “The Dark Knight” (Warner Home Video) and “Star Trek” (Paramount Home Entertainment).
The growth in electronic delivery, along with a notable increase in Digital Copy redemptions are two clear indicators of a greater acceptance and usage of digital delivery.
Five Blu-ray Disc releases saw sales in excess of one million units this past year and “Snow White and the Seven Dwarfs” (Disney) was the best-selling BD title of the year. A number of distinct hits marked 2009 including “Twilight” (Summit Entertainment), “Transformers: Revenge of the Fallen” (Paramount) and “The Hangover” (Warner) as the three highest grossing home entertainment titles of the year.
The top three VOD titles in 2009 were “Twilight,” “Gran Torino” (Warner) and “He's Just Not That Into You” (Warner), all of which were available day-and-date with DVD and Blu-ray Disc.
Sales of Blu-ray Disc playback devices — including set-top box and game consoles — sold through 17.3 million units since launch. Some 4.5 million devices sold in the fourth quarter, raising total sell-through to nearly 8 million in calendar 2009, according to DEG numbers.
The DEG estimated that more than 71 million HDTV sets have sold to consumers, bringing the number of HDTV households to nearly 48 million, and 33 percent of those homes have more than one set.
According to numbers from the DEG, Consumer Electronics Association (CEA), retailers and manufacturers, an estimated 22.8 million DVD players were sold to U.S. consumers in 2009.
Since launch in spring 1997, some 277 million DVD players, including set-top and portable DVD players, home theater in a box systems, TV/DVD and DVD/VCR combination players, have sold to consumers, bringing the number of DVD households to approximately 92 million (adjusting for households with more than one player).
The DEG estimated that 67 percent of DVD owners have more than one player.
In the fourth quarter 2009, nearly 375 million DVDs shipped to retail, according to figures compiled for the DEG by Swicker & Associates. More than 1 billion software units shipped throughout 2009 and more than 11 billion discs have shipped since the DVD format launched in 1997.
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