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Wednesday, September 17, 2008
DVD Sales Flattening, But Don't Blame Digital Downloading

Americans still spend most of movie budget on buying and renting DVDs, according to NPD's "Entertainment Trends in America" report.

DVDs are still the most popular format when it comes to how U.S. consumers choose to purchase movies and other video content. On average, U.S. consumers spend $8 out of every $10 of their budgets buying or renting DVDs, according to information presented today by The NPD Group's Senior Industry Analyst for entertainment, Russ Crupnick, at the DisplaySearch HDTV 2008 Conference in Hollywood, Calif. Less-than one percent of Americans' movie budget is currently spent downloading movies and TV shows from the Web.

"Everyone is guessing when video on demand and digital downloads will spell the end for packaged media" Crupnick said. "At this point, though, digital video is still an extremely small part of overall consumer entertainment spending."

According to information from NPD's recent "Entertainment Trends in America" report, 41 percent of dollars budgeted for movies and video was spent on DVD movie purchases, 11 percent for purchases of TV programs on DVD, and 29 percent on DVD rentals (including Netflix and other video-subscription services). In addition, 18 percent is spent on movie tickets, but just 0.5 percent is currently spent on renting or purchasing TV shows or movies in digital format from the Web.

When asked how they watched a full-length movie in the past three months, 67 percent of respondents said they viewed a DVD they own themselves, while half watched on a rented DVD, and 18 percent opted for a video-on-demand (VOD) movie. Eight percent reported viewing movies on their portable media devices (e.g., digital music/video player or mobile phone), while 6 percent downloaded a movie from a free file-sharing service and watched on a computer or television. Just 2 percent paid for a digital video download from the Web; however, more than half (52 percent) reported visiting sites likeYouTube, in order to watch streaming video.

"A growing number of Americans are going to YouTube and other sites for streaming video, but when it comes to paying for video content, they're still focused on DVDs," Crupnick said. "Though the near-term talk of a digital revolution is probably overblown, as we've seen previously in the music industry, new content delivery sources can quickly take root among consumers. That?s why many home video companies are aggressively pursuing digital strategies, because the inflection point will come -- it's just not coming tomorrow."

Blu-ray Sales to Double

At the same event, researchers for NPD Group unit DisplaySearch said that global unit sales of standalone Blu-ray players will triple this year and will double next year as prices fall.

Worldwide consumers will buy 2.38 million Blu-ray set-top players this year and 5.31 million next year, up from about 700,000 in 2007, said Paul Gagnon, DisplaySearch director of North America TV research.

The increase is a reflection of falling prices for Blu-ray players as well as the rapid adoption of HDTVs, especially in the U.S., which will switch to all-digital broadcasts next February.

Still, the high price of Blu-ray players and customer satisfaction with standard-definition machines remain deterrents to further growth of the next-generation machines.

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