As Economy Slowly Recovers, Home Video Sales Drop

Some industry folks attempt to put the best spin possible on this bad news, but an overall 2% drop in home video sales from an already catastrophic collapse is terrible news. The economy isn’t getting worse; it’s sputtering but has been getting better for a couple of years now, and the home video sales curve is moving in the opposite direction. Furthermore, Blu-ray is what saved this number from being a four-alarm fire and in order to make that happen, prices of Blu-rays discs and players had to dramatically drop. That means less profit.

My guess is that a large percentage of the Blu-ray bump in sales came from cheap, catalogue titles, not new titles. That’s bad news because there are only so many catalogue titles to release, and technology-wise, home video has hit a wall. People aren’t interested in 3D at home and picture and sound quality can’t improve past Blu-ray. So what’s the next format to entice people to purchase titles yet again?

This fantasy that Ultraviolet is the next step in this evolution is just that. UV might be a nice additional feature, but it’s hard to imagine customers purchasing a title AGAIN for portability reasons alone.

USA Today:

Sales of movies on Blu-ray discs and films delivered digitally and on demand rose in 2011, but not enough to make up the gap in falling DVD sales.

Consumers spent $18 billion buying and renting discs and on digital movies in 2011, a 2% decrease from 2010, the Digital Entertainment Group (DEG) will report Tuesday.

Sales of Blu-ray discs topped $2 billion for the first time, up 19% from 2010. But DVD sales dropped 20% to $6.8 billion.

Still, home video executives were satisfied with the results considering the economic challenges of the past year and an underwhelming box office slate of films hitting retail.

New releases coming to home video in 2011 had total box-office revenue about 9% below those in 2010, said Warner Home Video President Ron Sanders, who is also president of the DEG.

Total movie sales dropped 12% to $9.5 billion, from 2010. Total movie rentals remained steady at $7.5 billion, down less than 1%. Digital sales, including streaming movies, rose 50% to $3.4 billion. …

“We see UltraViolet as kind of icing on the cake,” says Fox Home Entertainment President Mike Dunn. “Once that ecosystem is in place, you have the opportunity … to go from a niche market to mass market.”

Adds Mike Vorhaus of Frank N. Magid Associates, “One of the top features digital consumers value is transportability across devices.”

Full story here.

In worse news, Hollywood’s 16% drop in 2011 attendance is likely to translate to lower DVD and Blu-ray sales once the rest of 2011’s titles hit store shelves over the next few months.