U.S. Home Entertainment Market Shows Modest Growth

MONTEREY: Spending on movies and TV shows in the home entertainment market posted a 1 percent growth in 2013, marking the second straight year of increase after declining from 2004 to 2011, according to IHS Technology.

The gains were led by modest growth in pay-TV VOD and strong increases in Internet sales, rentals and subscriptions. Revenues in 2013 were $18.3 billion. Pay-TV revenue grew by 1 percent, while Internet sales increased 39 percent, rentals by 40 percent and subscriptions 31 percent. 2013 was the second consecutive year of 30 percent-plus growth rates for the digital home entertainment categories, which now make up more than one-third of the market.

Spending on physical discs at rental and retail is not declining as fast as it was during and immediately after the recession of 2007-09. Total U.S. consumer spending on purchases and rentals of movies and TV shows on disc dropped to $11.7 billion in 2013, down from $12.9 billion in 2012, based on data from the IHS U.S. Video Intelligence service. This represents the ninth consecutive year of decline for the U.S. home video market, but at single-digit rates for the second year in a row rather than the double-digit drops seen as recently as 2011.

“While 2013 was another record year for the theatrical box office, that didn’t translate into an increase in disc sales and rentals, given the ticket returns and resulting video success of last year’s hits including The Avengers and The Hunger Games,” said Michael Arrington, senior analyst, U.S. video, for IHS. “While many factors have contributed to the nearly decade-long fall in U.S. consumer video disc spending since the market peaked at $21.9 billion in 2004, one long-term issue is consumers’ rising interest in alternative diversions, including streaming digital video, video games, mobile devices and apps, and Internet offerings like YouTube.”

“During the heyday of DVD, the widespread availability of cheap discs allowed most consumers to build enormous video libraries,” Arrington added. “Now consumers have become more discriminating in their purchases. And with the rise of iTunes and other online sources, it’s pretty much an equal choice for buyers whether they want to purchase a video title on disc, or download it from the Internet. Under these circumstances, an increasing number of consumers are choosing the download option.”