Report: Blu-ray Disc sales, rentals rise

But overall U.S. spending on home entertainment is down 8%

Digital Entertainment Group issued a first-quarter industry report Thursday showing higher-than-expected sales of Blu-ray Disc players, raising hope of a similar spike in HD disc sales during the coming months.

Compared with a year earlier, Blu-ray hardware sales jumped 125% during the most recent quarter. Blu-ray Disc sales rose 74% and rentals 36%, with the prospect of even greater growth as software sales gains generally lag jumps in player shipments.

Still, the DEG report was hardly all good news.

U.S. consumer spending on DVD, Blu-ray Discs and digitally distributed content was off 8% at $4.8 billion, and sales of packaged media slid 11%. The downticks reflected an ongoing decline in DVD revenue in the latest quarter and the dumping of discounted product as part of the liquidation of retailer Circuit City during the comparable year-earlier period, officials said.

Rentrak data showed total rental revenue off 14% during the quarter, "largely as a result of bricks-and-mortar store closures," DEG said.

Digital distribution, including electronic sell-through and VOD, grew by a combined 27%. Revenue from digitally delivered titles reached $617 million during the year's first three months.

Nonetheless, industry consensus projects declines in overall home entertainment revenue well into next year.

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