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NPD: Disc Spending Still Tops VOD

4/18/2011 11:15:06 AM Eastern

Port Washington, N.Y. - Despite the buzz about digital delivery, DVDs and Blu-ray Discs (BD) continue to rank among consumers as the most popular formats for home video entertainment, according to a new study from the NPD Group.

The NPD's "Entertainment Trends in America" report found that over
the past three months, 77 percent of consumers watched a movie on a DVD or BD,
which is unchanged from a year ago.

Those who viewed movies from physical discs reported watching an
average of four hours per week, also unchanged from last year.

By comparison 68 percent watched a movie on a TV or cable network
channel, 49 percent at a theater, and 21 percent used paid video on demand
through their TVs.

When asked about their recent spending on home video, consumers
reported that 78 percent of their home video budgets went to the purchase and
rental of DVD and BD, including online and in-store retail purchases and
rentals, while 15 percent was spent on video subscription services like Netflix
that offer a mix of physical and streaming rentals, NPD said.

Digital video downloads, paid streaming, paid transactional video
on demand (VOD), and pay per view (PPV) comprised the remaining 8 percent.

Overall per-capita spending on home video fell by 2 percent,
according to the report.

"With the well publicized struggles of Blockbuster and retail
video stores closing around the country, and with media attention increasingly
focused on the newest digital home-video offerings, the value and importance of
physical formats to the home video industry and to consumers is often
overlooked," stated Russ Crupnick, NPD Group entertainment industry
analyst.  "Even though DVD sales and
rentals are slowing, there is no evidence that consumers are abandoning
physical discs for watching movies, even as the choices for viewing are
expanding."

In addition to video store closures, many consumers have already
built DVD collections of their favorite catalog video titles and are becoming
more comfortable using various digital video options. Year-over-year physical
disc purchases and rentals fell 9 percent (not including rental subscriptions).

As with CDs in the music industry, physical discs are not expected
to disappear anytime soon, Crupnick said.

"We expect strong growth from many digital sectors, driven by
connected devices, improving selection, and the consumer's endless quest for
convenience," said Crupnick. "For now, though, physical discs continue to lead
overall engagement and spending by home video viewers; and even with increasing
use of VOD and other digital formats, the primacy of DVD and Blu-ray in home
video will continue for the foreseeable future."

The findings came from an online consumer tracking study
conducted in March. It was based on 9,636 completed responses from U.S.
consumers, and final survey data was weighted to represent U.S. Web users age
13 and older.

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