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Download, subscription video surge as retail rentals tank

updated 02:05 pm EDT, Mon May 2, 2011

DEG says subscription, digital video up a third

Non-traditional movie rentals upstaged retail shop rentals in the first few months of 2011, DEG reported Monday. Subscription rentals, including both discs and Internet streaming from sites like Netflix, created 33 percent more spending in the March quarter. Cash from rentals at Blockbuster and other legacy stores simultaneouly dropped 36 percent, however, hinting that many had been giving up the old method in favor of new.

The rate of the switchover was just enough to save the industry in rentals and was helped by one-at-a-time digital rentals from iTunes, cable provider video, and other services. Total results were up just 2.5 percent compared to early 2010 but would have been flat without non-subscription digital choices.

DVD sales were also dropping as the format showed some of the first clear signs of dying. The revenue from buying discs was down 20 percent to about $2.07 billion, but cash spent on Blu-ray movies was up 10 percent. Buyers snapping up PlayStation 3 systems and home-theater-in-a-box setups to play Blu-ray movies also shot up 13 percent.

Some of the DVD slump was blamed on a lack of major titles to spur on sales as well as Easter having come later than usual and deprived studios of some holiday sales. Overall spending on "home entertainment," focused mostly on movies, dropped about 9.8 points to $4.2 billion.

Online video is still a relatively small slice of the market but has been quickly gaining momentum. Although Netflix considers DVD important, it has been streaming greater and greater amounts of its video online and now vies with Comcast for the title of the largest subscription video provider in the US. iTunes is just a fraction of Netflix's share but ties with cable- and satellite-based VOD for interest.

by MacNN Staff



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