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DEG Charts Q1 Blu-ray, Digital Dist. Sales Growth

Los Angeles
– The

Digital Entertainment Group

Thursday that Blu-ray Disc hardware and software sales saw considerable growth
over the first quarter of 2010.

Blu-ray software sales rose 74 percent in the period compared
with the first quarter of 2009, the DEG said.

Still, overall consumer spending hit $4.8 billion on prerecorded
DVDs, Blu-ray Discs and digital distribution in the period, down 8 percent from

According to the DEG, with input from all major motion picture
studios, Blu-ray Disc software continued to see significant growth in the first
quarter, with sell-through up 74 percent and rental up 36 percent, compared
with the same period last year.

Total rentals were down 14 percent in the first quarter, due largely
to brick-and-mortar store closures, according to Rentrak’s Home Video

Meanwhile, the DEG said Blu-ray Disc hardware sales saw set-top
sales growth of 125 percent vs. first quarter 2009.

Digital distribution, which includes electronic sell-through
(EST) and video-on-demand (VOD), grew a combined 27 percent to $617 million in
the first quarter compared with the same period last year, the DEG said.

Over the three months, March was positive for home entertainment
sales, the DEG said. Consumer home entertainment spending titles rose 2 percent
for the month, compared with a year ago, with sell-through up 4 percent,
digital distribution up 35 percent and Blu-ray Disc software sales up 124

“We are still facing a challenging environment but are very
pleased to see positive indicators of stabilization in our overall business,”
said Ron Sanders, DEG and Warner Home Video president. “We are encouraged to
see consumers continue to realize the tremendous value of Blu-ray and growing
more comfortable with digital delivery.”

The DEG’s quarterly sales data is compiled using input from
member companies, retailers and industry association tracking sources.

Consumer spending for sell-through packaged goods exceeded $2.5
billion for the quarter, while packaged goods sales in the first quarter were
off 11 percent, according to industry data.

During the period last year, national retailer Circuit City went
through a chain-wide liquidation that included releasing unexpected quantities
of DVD and Blu-ray Disc titles in the market, the DEG observed.

According to the Nielsen, the impact of Circuit City’s
liquidation significantly affected comparisons to sales for first quarter of

Some 34 million Blu-ray Discs shipped to retail in the quarter,
according to figures compiled by Swicker & Associates on behalf of the DEG.
With growth of 72 percent over the same period last year, household penetration
of all Blu-ray Disc-compatible devices, including set-top players, PC drives
and PlayStation3 consoles, has now reached 18 million U.S. homes, according to
group estimates.

Figures compiled by the DEG using data from the Consumer
Electronics Association (CEA) showed retailers and manufacturers have sold some
75 million HDTVs to consumers to date.

With some 4.7 million HDTVs selling in the first quarter, U.S. household penetration is at approximately 50 million,
the DEG said. Nearly 34 percent of all HDTV owners have more than one set.

More than 94 million DVD players sold to U.S.
consumers in the first quarter of 2010.

Since launching in spring 1997, some 280 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), according to the CEA, retailer and manufacturer
data. The DEG estimates that some 67 percent of DVD owners have more than one