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DEG: Q1 Home Video Revenue Down 5%  

Los Angeles — Consumer spending on prerecorded home-video entertainment declined 5 percent from a year ago to $5.3 billion during the first quarter of 2009, according to a study released this week by the Digital Entertainment Group (DEG).

The report tracked sales of pre-recorded DVD, Blu-ray Disc and digital distribution.

The DEG’s data was based on input from member companies, retailers and industry association tracking sources.

The home-entertainment window’s net contribution to the studios was down less than 4 percent for the quarter, the DEG said.

“While consumer spending was down in the first quarter of 2009, the number of consumer transactions remained constant at 898 million (flat against the previous year), underscoring that the demand for home entertainment remains high,” the DEG said.

The study showed sales of Blu-ray content were up 105 percent to $230 million and digital distribution was up 19 percent to $487 million for the period. Standard DVD sell-through was down 14 percent to $2.89 billion.

Rental transactions and spending for DVD and Blu-ray were up 1 percent in the period, although year-to-date combined Blu-ray Disc and DVD revenue was off 9 percent to $3.35 billion.

The DEG also noted that Q1 sales this year were impacted by the Easter holiday falling outside of the first quarter reporting period, while Easter sales were included in March 2008 numbers. The holiday general accounts for a significant sales spike, the DEG said.

“People are choosing new ways to consume entertainment, but there is no clear evidence of a long-term change in consumer behavior,” stated Ron Sanders, president of both the DEG and Warner Home Video. “What we are very likely seeing here is an understandable consumer reaction to the difficult financial times in which we find ourselves.”

“When considering that this all has been achieved in the worst recession ever, it is clear that home entertainment’s stability is fueled by Blu-ray’s popularity,” said Bob Chapek, DEG chairman and Walt Disney Studios Home Entertainment president. “Blu-ray’s tremendous performance can be attributed to its unsurpassed picture and sound quality. Moreover, we remain confident that demand for Blu-ray will continue to grow given that it is a revolutionary platform.”

According to figures compiled by Swicker & Associates on behalf of the DEG, nearly 20 million Blu-ray discs shipped to retail in the first quarter of the year — a growth of 108 percent over the same period last year. Sales of all Blu-ray-compatible devices, including set-top players, PC drives and PlayStation3 consoles are now in more than 10.5 million U.S. homes, the DEG said.

Meanwhile, the DEG using Consume Electronics Association (CEA) data estimated that 55 million HDTVs have sold to consumers, including some 4.7 million HDTVs that sold in the first quarter. U.S. HDTV household penetration is approximately 42 million, considering nearly 25 percent of all HDTV owners have more than one set.

As for first-quarter DVD sales, Swicker & Associates said 312 million DVDs shipped to retail, and more than 10.5 billion DVD discs have shipped to retail since launch in 1997.

More than 5 million DVD players sold to U.S. consumers in the first quarter of 2009, the DEG said. Since launch in spring 1997, some 258 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 estimates that some 64 percent of DVD owners have more than one player.