Hollywood extends slow turnaround in home video sales

Sun Jul 29, 2012 6:37pm EDT
 
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By Ronald Grover

LOS ANGELES (Reuters) - Hollywood studios continue to see a slow turnaround in home video sales after a seven-year decline, as consumers increase the numbers of movies and TV shows they stream online and buy more high-definition Blu-ray discs as DVDs fall from favor.

The Digital Entertainment Group, a trade group whose members include studios and electronics companies in the video business, is scheduled to announce on Sunday that U.S. consumers spent $3.96 billion to buy or rent TV movies and TV shows in the second quarter this year, a scant 0.3 percent more than a year earlier.

Still, that was the second consecutive quarter of growth in Hollywood's "ancillary market" for films and TV shows and the third in the past four quarters.

In the first half of the year, consumers spent $8.4 billion to rent, buy or stream movies, a 1.4 increase from last year.

Growth in the ancillary market is crucial to Hollywood studios, whose films often generate more revenues from that market than from the domestic box office.

For the first time, digital delivery of movies surpassed movie rentals in the second quarter, with consumers spending $1.2 billion on movies from Netflix subscriptions, ITunes downloads and other digital distribution methods, an 81 percent increase.

Consumers spent nearly $1.1 billion to rent DVDs in the second quarter from stores, kiosks and other means, a 27 percent decline. TV viewers ordered $478 million through video on demand services from cable and satellite operators.

"We're seeing strong growth in digital distribution, a business that has great margins for us," said Craig Kornblau, president of Universal Studios Home Video and DEG steering committee member.   Continued...