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DVDs in Decline

November 17, 2010 | Author: Ibex Marketing

People spent much less money on buying movies on disc in the first nine months of this year than last year, according to research by BTIG Research, as reported by the LA Times. This is in spite of the amount spent on Blu-ray discs nearly doubling in that same period.

What’s behind the 9% drop? Redbox rentals have to be a big factor, as kiosk rental revenues grew by about 50%. Netflix revenues increased by more than a quarter, and that has to include some people using their Internet streaming service to watch movies and past seasons of television shows. And video-on-demand (VOD) services posted a 20% increase in revenues. (Meanwhile, brick-and-mortar rental services such as Blockbuster saw a huge 30% drop in revenues.)

There are certainly a lot of moving parts in this picture, but I see it as strong evidence that fewer people feel the need to own a copy of a movie, and are satisfied just to watch it whenever they want using either a disc rental or some form of streaming VOD service. This will put more pressure on the Hollywood studios to find ways to get more money from outlets other than retail sales to recoup these lost revenues.