Strong Theatricals Boost Consumer Spending in Q1, DEG Says

Consumer spending on home entertainment rose nearly 9% in the first quarter of 2018 to $5.7 billion, according to estimates released May 16 by DEG: The Digital Entertainment Group.

The gains were driven by continued growth in subscription streaming as well as a strong theatrical slate that boosted digital sales of movies and slowed the rate of decline for disc sales.

Digital sales of movies and TV shows, or electronic sellthrough (EST), rose 9% in the first quarter of 2018 to $623.7 million. That’s a 50% improvement from the full-year 2017 growth rate of 6%. Sales were led by a 15% upswing in sales of theatrical movies, which more than offset a slight decline in sales of TV shows.

Combined Blu-ray Disc and DVD sales in the first quarter of 2018 came in at nearly $1.06 billion, down 10.1% from the prior year but significantly lower than the full-year 2017 decline rate of 14.1%. Sales of the emerging 4K Ultra HD Blu-ray format were up 130% from the first quarter of 2017, accounting for nearly 12% of total Blu-ray Disc spending.

The total amount of money consumers spent on buying filmed content in the first quarter of 2018, DEG says, was off just 3.84% from the first quarter of 2017, slipping to $1.68 billion from $1.75 billion.

Subscription streaming, meanwhile, continued to soar, rising to nearly $3 billion, a 28.9% increase from the first quarter of 2017, according to data compiled by global information provider IHS Markit.

Meanwhile, the disc rental market continues to flounder, with rental spending at brick-and-mortar video stores slipping into the double digits. DEG pegs video store rental spending for the quarter at $88 million, an 18% decline from the first quarter of 2017.

Consumer spending on disc rentals at kiosks, a market dominated by Redbox, fell nearly 22% to $279 million, according to DEG estimates.

Subscription rental — chiefly Netflix’s disc-by-mail rental business — was down 18.8% to just under $100 million.

According to the DEG, some 125 million U.S. households now have at least one HDTV, with 35 million households having at least one 4K Ultra HD TV. Blu-ray Disc playback devices (including 4K Ultra HD Blu-ray players, set-tops and game consoles) are now in nearly 100 million U.S. homes.

Consumers now have more than 300 4K Ultra HD Blu-ray titles available for viewing on Ultra HD Blu-ray players and enabled game consoles and 438 4K Ultra HD Digital titles, the DEG reported.

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