Blu-ray Soars In Declining Video Entertainment Market

Retail sales and rentals of Blu-ray discs soared last year, while the overall U.S. home video entertainment market declined on plummeting DVD retail sales, a market research firm says.

Retail sales of movies in the high-definition format rose 64.2% year to year, as disc rentals boomed by 105.5%, Screen Digest reported Wednesday. Blu-ray's popularity contrasted with an overall market that saw a 3.8% decline.

The primary reason for the drop was a 15.6% plunge in DVD retail sales, which amounted to a $1.5 billion decrease in sales, the researcher says. Retail sales represent the largest segment of the home video entertainment market.

DVD rentals, the second most important segment, also contributed to lowering the overall market. Rentals declined 12.4%, or $749 million.

The market's overall performance reflects a shift from old to new technologies. Blu-ray was the brightest technology advancement and coming in second were electronically delivered rentals and sales over the Internet or through networks provided by cable, satellite, and telephone companies.

The network segment amounts to only 12.2% of the total $18.5 billion video entertainment market last year. Physical rentals and sales of DVDs accounted for the rest, which is why Hollywood studios continue to release movies first on DVD before licensing them for electronic delivery either over the Internet through companies like Netflix or through subscription TV systems.

Given the growth in network-delivered rentals and sales, the favored status of physical DVDs is likely to wane. Revenue from all types of electronic delivery rose by 21.9% last year, Screen Digest says. The segment reached a milestone by exceeding 10% of total market revenue for the first time.

"Screen Digest expects the network segment to gain share in the overall market during the coming years, leaving studios with a delicate balancing act as they attempt to revive growth in overall home video entertainment revenue in this post-recession era," Tom Adams, analyst for the research firm, says.

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