Blu-ray sales up as home entertainment spend drops

LOS ANGELES Fri Aug 5, 2011 4:56pm EDT

A shopper walks past a Blu-ray Disc logo at an electronic shop in Tokyo February 18, 2008. REUTERS/Issei Kato

A shopper walks past a Blu-ray Disc logo at an electronic shop in Tokyo February 18, 2008.

Credit: Reuters/Issei Kato

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LOS ANGELES (Reuters) - U.S. sales of Blu-ray movie and television discs rose this year as overall spending on home entertainment dropped and viewing habits shifted, new figures from an industry group showed.

Rentals through subscription plans and kiosks also gained sharply while consumers again turned away from traditional video stores, according to a report released on Friday by DEG: The Digital Entertainment Group.

Total consumer dollars spent on home entertainment products -- including DVDs, video on demand and online streaming -- fell 5 percent to $8.3 billion in the first half of 2011. Industry executives pointed to a weaker movie line-up compared with a year earlier when the blockbuster "Avatar" was released.

Sales for Blu-ray and DVD discs combined in the first half of this year fell 18 percent to $3.9 billion, driven by a decline for traditional DVDs, compared with the same period a year ago.

But Blu-ray on its own gained 10 percent, the industry group said. It did not release dollar figures for Blu-ray and traditional DVD separately.

Blu-ray's high-quality picture appealed to viewers as more homes added Blu-ray players, industry officials said.

"It's getting very well-established in households. Consumers are getting more and more comfortable with buying Blu-ray," said Ron Sanders, president of Warner Home Video and head of the industry group.

Homes with Blu-ray capable devices rose by 2 million in the second quarter to 31.6 million as prices for many players fell below $100. Blu-ray discs, digital sales and video-on-demand are higher-margin products for studios that all grew this year, DEG said.

At the same time, subscription rentals through mail and online streaming services such as Netflix Inc jumped 46 percent and brick-and-mortar stores dropped 28 percent. Rentals from kiosks, mainly Coinstar Inc's Redbox, rose 40 percent.

While streaming options have grown, spending on subscription plans reached less than half of Blu-ray and DVD sales, hitting $1.6 billion, in the first half of the year. Kiosk sales were $805 million.

Weaker theater performance for films released for home viewing likely drove the overall spending drop, Sanders said. Box-office receipts for new releases ranked 16 percent lower than a year earlier. "Avatar," the all-time box-office leader, sold more than 12 million discs in the second quarter of 2010 alone.

The recession also hit home-entertainment sales in recent years, Sanders said.

Broken down by quarter, spending slid 6.4 percent in the first quarter and 3.6 percent in the second quarter. That showed "a stabilization and improvement in the market," said Amy Jo Smith, DEG's executive director.

The second half should benefit from a handful of blockbuster movies set for release including "Harry Potter and the Deathly Hallows -- Part 2" and "Pirates of the Caribbean: On Stranger Tides," officials said.

The Digital Entertainment Group represents 70 companies including studios Walt Disney Co and Time Warner Inc unit Warner Bros. plus hardware makers Samsung Electronic Co Ltd and Panasonic Corp.

(Reporting by Lisa Richwine, editing by Matthew Lewis)

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