twice connect
careers

Blu-ray, Digital Up As Video Sales Dip

8/02/2010 12:01:00 AM Eastern

LOS ANGELES — The Digital Entertainment
Group (DEG) had both good
news and bad for home video sales in
the first half of 2010 — Blu-ray Disc and
online digital purchases were up but
over video software sales were down
as DVDs continued to slide.

The group said consumer spending
on DVDs, Blu-ray Discs and digital distribution
dropped 3.3 percent to $8.8 billion
for the first half of 2010 compared
with the same period last year.

However, consumer spending on
home entertainment products was
up 2.3 percent in the same period, the
group said.

The DEG, whose members comprise
companies in the video software and
hardware industries, said that spending
for home entertainment was nearly
flat, down only 0.7 percent, in the second
quarter compared with the same
period in 2009.

Blu-ray Disc sales and rentals continued
to be strong, achieving a combined
$982 million for the first half of the
year.

Blu-ray Disc sell-through was up
84 percent to $733 million at the midyear
point compared with the same period
last year, according to the DEG.
Blu-ray Disc sell-through also grew
a 112 percent in the second quarter, to
$363 million, compared with secondquarter
2009.

However, overall packaged-media
sell-through, which includes DVD and
Blu-ray Disc, declined 7.1 percent in the
first half of the year compared with the
same period last year. In the second
quarter, packaged-media sell-through
declined only 3 percent compared with
second quarter 2009.

The group reported that digital distribution
maintained a steady rise with
electronic sell-through (EST) up 36.9
percent to $285 million and video-ondemand
(VOD) up 19.1 percent to $865
million in the first half of the year, a combined
growth of 23.1 percent to $1.1 billion,
surpassing the $1 billion mark for
the first time for a six month period.

Blu-ray Disc hardware sales continued
to climb in the first half of the year,
selling almost 2 million set-top units, an
increase of 103 percent over the same
period last year.

This brings the total installed base
of Blu-ray Disc playback devices in the
U.S. to 19.4 million units, according to
the DEG.

“The growth of Blu-ray, both hardware
and software, continued to dominate
the home entertainment landscape
in the first half,” said Ron Sanders,
DEG president and president of Warner
Home Video. “Clearly, we are still
grappling with a challenging marketplace
and a tough economy, but overall
the trends that we are seeing are encouraging.”

According to Rentrak Home Video
Essentials reporting, rental spending
was down 4.9 percent to just less
than $3 billion in the first half of 2010.
The DEG said the overall market continues
to be hindered by the Movie Gallery
store closures, although kiosk rental
revenue was up 55 percent in the first
half of the year.

The DEG compiles quarterly sales
data based on input from member companies,
retailers and industry association
tracking sources.

In other first-half findings: Blu-ray
Discs shipped to retail in the first half
of 2010 topped 77 million, up 98 percent
over the comparable period in 2009, according
to figures compiled by Swicker
& Associates on behalf of the DEG.

Household penetration of all Blu-ray
Disc-compatible devices, including settop
players, PC drives and PlayStation3
consoles, has now reached 19.4 million
U.S. homes.

A total of 79 million HDTVs have sold
to consumers cumulatively to date, according
to figures compiled by the DEG
based on data supplied by the Consumer
Electronics Association, retailers
and manufacturers.

With some 8.5 million HDTVs selling
in the first half of the year, U.S. household
penetration is at approximately
51.32 million, the DEG said.

Approximately 8.7 million DVD players
sold to U.S. consumers in the first
half of 2010, according to DEG reports.

Since launching in spring 1997, some
284 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
91 million (adjusting for households
with more than one player).

The DEG estimates that some 68 percent
of DVD owners have more than
one player.