DEG Q2 Home Entertainment Report Shows Rebound in Sellthrough

4 Aug, 2016 By: Thomas K. Arnold

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Is the buying bug once again biting consumers of home entertainment?

Consumers spent 4% more on buying movies and other content on disc as well as digitally in the second quarter of this year than they did in the second quarter of 2015, according to numbers released Aug. 4 by DEG: The Digital Entertainment Group.

Disc sales, which for years have been declining virtually every quarter, rose 3% to $1.2 billion, buoyed by a 35% increase in Blu-ray Disc sales.

Electronic sellthrough, also known as “Digital HD,” rose 8.7% to $466 million in the quarter, up from $429 million in the comparable period a year ago.

Total consumer spending on home entertainment purchases is estimated at $1.67 billion for the three-month period that ended June 30, a healthy increase of 4.5% from $1.59 billion in the same period last year.

Ron Sanders, president of Warner Bros. Worldwide Home Entertainment Distribution, notes that the box office value of movies that came to the home market during the quarter was up 18% from the previous year's quarter.

Observers say the launch in March of Ultra HD Blu-ray also may have been a factor. Ultra HD Blu-ray Disc is the next-generation disc format with four times the pixel density of HD Blu-ray as well as high dynamic range (HDR), with greater contrast and deeper, more life-like colors. The format got off to a successful start in the first quarter of this year, with the first volley of Ultra HD Blu-ray discs hitting stores in March and selling far better than expected, according to studio executives.

The format’s launch was even more successful than regular Blu-ray Disc back in 2006.

According to DEG, 1.4 million 4K Ultra HD TVs were sold in the U.S. market in the second quarter of this year, up 119% from the second quarter of 2015 and bringing the total number of sets purchased to more than eight million.

More than 45 Ultra HD Blu-ray title releases were available in the first half of the year, with impressive sales of about 288,000 units.  

Total home entertainment spending rose 6% in the second quarter, to an estimated $4.33 billion, up from $4.08 billion in the April-to-June period in 2015.

Subscription streaming, led by Netflix, continued its explosive growth, with estimated consumer spending jumping 20.6% to $1.5 billion, up from $1.25 billion in the year-ago quarter.

Traditional video rental, at brick-and-mortar stores, fell by a similar percentage, coming in at just $122.9 billion, a 21% decline.

Kiosk rental revenue, reflecting the recent woes of market leader Redbox, was pegged by DEG to be down 13% for the quarter, to an estimated $380 million.

Video-on-demand, the other digital component (in addition to streaming and Digital HD), posted a 7.2% gain in consumer spending, to $518 million.

For the first six months of the year, consumer spending on home entertainment is up nearly 2%, according to DEG estimates, at $8.89 billion, compared with $8.7 billion in the first six months of 2015.

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