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Blu-ray, DVDs by far still largest source of Hollywood's home video revenue

Despite new digital forms of movie distribution sales of Blu-ray discs and DVDs remain the largest source of revenue for the movie industry, accounting for 61% of home video spending on movies (excluding Netflix and other movie-streaming subscriptions) in 2012.

According to The NPD Group, the previous year the Blu-ray and DVD movie share was 64%; the market research company attributes some of the share decline to lower average prices paid for Blu-ray discs, which fell 7% to reach $19.97 per unit.

In comparison, the digital video market for movies, while growing, accounts for 16% of consumer expenditures - an increase of 2% over 2011. Pay-TV video on demand (VOD) movies from cable, satellite, and telco operators also rose 1% to reach a 12% share of revenues.

"There is a significant base of video customers in the US who continue to be comfortable with physical formats, and a large majority haven't made the complete transition from discs to digital video," said Russ Crupnick, media analyst with NPD. "For the time being, at least, consumers still like to own and rent movies and TV shows on DVD and Blu-ray, even in a world of where connected devices and digital rental, streaming, and ownership options are becoming more accepted and commonplace."

NPD reports on several categories of digital on-demand movies that are purchased or rented as individual transactions (e.g. not subscriptions). VOD rentals from pay-TV operators accounted for 72% of transactional VOD movie rental revenue. Electronic sell through (EST) of movies, which is widely seen to be the next generation video ownership option, showed strong growth in 2012. However, EST remains a relatively small segment of the industry, comprising just 16% of VOD revenue. Internet VOD, or iVOD comprised 12% of transactional VOD revenue.

DVD and Blu-ray Disc rentals from Redbox and other kiosk companies comprised nearly half of all physical disc movie rentals in 2012, rising 8% over the prior year to encompass nearly half (46%) of the market. Subscription disc rental?s share of disc rentals fell 5% to 32%, as Netflix focused on the streaming side of its business. Movie rentals from brick-and-mortar stores fell 2% and now represent less than a quarter of all video-rental volume.

Television programming is also having quite an effect on the home video footprint. According to NPD's VideoWatch Digital consumer tracker, 80% of Netflix Watch Instantly rental transactions were TV shows, while in the EST arena, 90% of the transactions were TV programmes.

Story filed 30.01.13

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