Consumer Spending on Home Entertainment Rising for the First Time in Years

RedBox DVD Rental Kiosks - H - 2009
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The Digital Entertainment Group reports that subscription streaming rose an estimated 545.5% in the first quarter of 2012, while rentals at brick-and-mortar stores fell a devastating 39.4%.

Home video chiefs at the Hollywood studios finally have something to smile about.

For the first time in years, consumer spending on home entertainment actually rose in the first quarter of 2012, rising 2.5% to $4.45 billion largely due to the strength of streaming, according to numbers compiled by DEG: The Digital Entertainment Group.

The real good news for the studios, however, is that packaged media sales remained steady in the first quarter of 2012, with disc sales down less than 1% from the first quarter of 2011 – a sharp contrast to previous years, when first-quarter sales typically edged down in the double digits.

According to DEG, consumers spent $2.06 billion on Blu-ray Discs and DVDs in the first three months of 2012, down just slightly from the estimated $2.07 they spent in the comparable period last year. Continued declines in DVD purchases were offset by a 23% rise in Blu-ray Disc sales, the DEG says.

Add in electronic sellthrough, which posted a 17% gain in the first quarter, and total consumer spending on home entertainment purchases rose 0.5% to $2.22 billion.

More good news for the studios: disc sales of theatrical movies rose 2% in the quarter, sales of catalog titles on Blu-ray Disc were up 27%, and TV on Blu-ray sales soared 54%. More than 40.8 million U.S. homes now have at least one device capable of playing Blu-ray Discs.

The disc rental business didn’t fare as well. Rentals at brick-and-mortar stores fell 39.4% to $305 million, while subscription disc rental – mostly Netflix – was down an estimated 48% to $348 million, DEG claims. Kiosk rental – mostly Redbox – rose an estimated 30.1% to $523 million.

Subscription streaming, however, rose an estimated 545.5% to $548.6 million, largely due to Netflix’s successful conversion of disc renters to streamers. Video-on-demand posted a smaller gain of 6.8%, rising to $505.3 million.

Total rental spending – consisting of disc rentals as well as VOD and streaming – rose 4.4% to $2.23 billion from $2.13 billion in the first quarter of 2011.

UltraViolet, the studio-backed, cloud-based “digital locker” service, service grew to 2 million accounts in the quarter, DEG reported.