Streaming Finally Eclipses Disc Sales In 2016

Trade organisation Digital Entertainment Group has released figures for U.S. home entertainment spending for 2016 and two big trends have emerged in these annual numbers collecting figures from studios and retailers on a quarterly basis.

First up, disc sales were eclipsed by subscription streaming numbers for the first time to date with $5.4 billion in disc sales falling short of the $6.2 billion tabulated from SVOD providers such as Netflix and Hulu.

Disc sales, which have been the biggest revenue stream for studios since the turn of the century, were down nearly 10% versus 2015 while subscription streaming rose by 23%. Oddly though their figures ignore one of the biggest SVOD services – Amazon Prime – which would probably push that figure a little higher.

That doesn’t mean more profit for the studios though as disc revenues are being cannibalized because of subscription streaming, the latter providing a much lower margin to the studios. Even so, total U.S. home entertainment spending is up 1.36% to $18.3 billion versus 2015.

The other big trend is that electronic-sell-through (EST), or more commonly known as Digital HD, grew just 5.4% – down from 18% and 30% growth in previous years. Spending on both Digital HD and VOD rentals was just over $2 billion each, but rentals for the first time eclipsed full sales of titles – in this case by $67 million.

Both trends point to people not willing to own digital film content in the way they do DVDs and Blu-rays, instead opting to spend on several SVOD services and occasional VOD rentals – if they own a film they tend to stick with a disc.

The decline of the home entertainment industry revenue is seen as the impetus for studios to push for shortened windows which will see films go from theatrical to streaming services faster.

Source: Variety