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DEG: Blu-ray Spending Up, But Home Entertainment Lower

Los Angeles – The
Digital Entertainment Group’s (DEG) Mid-Year 2011 Home Entertainment Report
indicates that Blu-ray Disc spending is up more than 10 percent, and overall
consumer spending on home entertainment is down 5 percent.

That is despite a
16 percent drop in box office for titles that entered the home entertainment
window in the first half of 2011.

DEG said this is
notable because comparisons to last year’s sales are so highly skewed by the
April 2010 release of Twentieth Century Fox Home Entertainment’s “Avatar,” Hollywood’s
all-time box-office hit. In the second quarter of 2010 alone, “Avatar” sold
more than 12 million discs.

“While ‘Avatar’ ‘s
phenomenal success a year ago makes for tough comparisons, the underlying
numbers in the latest quarter showed encouraging signs,” DEG said. Among the

  • Higher-margin
    products like Blu-ray, electronic sell-through and video-on-demand (VOD) are
    all in growth modes, with spending on Blu-ray up more than 10 percent,
    electronic sell-through up 4 percent, and VOD up 4 percent over the same period
    last year. In total, digital transactions were up more than 5 percent over a
    year earlier.
  • While first-quarter
    2011 home entertainment spending was down 6.4 percent, second-quarter spending
    was down only 3.6 percent, which is an especially impressive improvement
    considering the absence of “Avatar,” and a further indication of stabilization.

  • Meanwhile, with
    many Blu-ray Disc players now affordably priced at or below $100 and built for
    versatility so that they play existing DVDs and stream content, more homes than
    ever are now Blu-ray ready.

  • In the second
    quarter, the number of Blu-ray homes grew 16 percent over 2010 (inclusive of BD
    set-tops, PS3s and HTiBs,) bringing the total household penetration of all
    Blu-ray compatible devices to more than 31.6 million U.S. homes. This makes
    Blu-ray one of the fastest-growing new technologies in the home entertainment
    industry, DEG indicated.

  • Further, 4.7
    million HDTVs were sold to U.S. consumers in second quarter 2011. While flat
    over the first half last year, HDTV penetration to date is now at more than
    66.8 million U.S. households.

  • DEG said the
    industry continues to manage the changes occurring in the marketplace and
    consumers can expect to see a number of initiatives, including Ultra Violet and
    Disney Studio All Access, along with applications that have yet to be announced
    from retailers, e-tailers as well as other studios in the coming year designed
    to improve the digital experience and increase the value of ownership.

DEG added that
with “the enormous slate of theatrical blockbusters” coming to home
entertainment in the third and fourth quarters, including “Transformers: Dark
of the Moon,” “Harry Potter and the Deathly Hallows: Part 2,” “The Hangover
Part II,” “Pirates of the Caribbean: On Stranger Tides,” and “Fast Five,” “the
industry is extremely optimistic about the second half of the year.”