Sami Smidi demonstrates an internet capable Wednesday, January 12, 2011 in Montreal.The Canadian Press
U.S. consumers are turning away from owning movies to watch in their homes, buying far fewer releases in 2011 than in previous years, in a further blow to film studios already reeling from a decline in ticket sales at cinemas.
Total revenues from the sale of films on DVDs, Blu-rays and via digital distribution fell more than 12 per cent to $9.5-billion, according to a report released at the Consumer Electronics Show by the Digital Entertainment Group, which represents film studios and device manufacturers.
"It's growing evidence of a disenchantment with owning movies," said Dan Cryan, analyst with IHS Screen Digest, a media research group. "Consumers are shifting to rental and subscription services which allow them to watch a wide range of content for a lower price."
There was encouraging growth of digital film distribution, which grew more than 50 per cent to $3.4-billion thanks to the emergence of online streaming services, such as Netflix.
Revenues from video-on-demand services increased almost 7 per cent to $1.9-billion, boosted by kiosk operators such as Redbox, which have risen in popularity as established retail outlets, such as Blockbuster, suffered. The DEG said the market for filmed entertainment, which includes all sale and rental revenues, had "clearly stabilized" and pointed to growth of 5 per cent in the third quarter, the first such increase since 2008.
However, the outlook remains bleak because profit margins on the sale of movies are much higher than movie rentals.
The decline in home movie sales comes after a fallow year at the box-office. Despite the success of the latest Transformers, Harry Potter and Pirates of the Caribbean movies – which each grossed more than $1-billion worldwide – total ticket sales fell by 4.5 per cent, although the decline was slightly offset by higher ticket prices. Revenues from ticket sales fell $390-million to $10.2-billion, a fall of 3.7 per cent on 2010, according to BoxOffice.com, which tracks box office performance.
Movie studios and media groups have gathered in Las Vegas for the Consumer Electronics Show to explore new distribution technologies and platforms. The industry is pinning its hopes on Ultra Violet, a new cloud based system that allows consumers to watch the movies they buy on the platform of their choosing.