DVD Purchases Slid 16% in 9 Months of 2010, Industry Data Show

U.S. DVD purchases fell about 16 percent through nine months of 2010, a casualty of the economy and changing tastes, based on data from the Digital Entertainment Group, a studio-backed trade association.

Total spending on films and TV shows declined 4 percent to $12.6 billion, the Los Angeles-based group said today in an e- mailed statement. DVD purchases tumbled to about $5.57 billion from $6.66 billion a year earlier, the report shows.

Consumers are adopting new ways of watching films, from online to kiosk rentals, forcing studios such as Walt Disney Co. and Time Warner Inc.’s Warner Bros. to adapt to a shrinking DVD market. Netflix Inc., the online and mail-order movie service, added 1.93 million subscribers last quarter. Blockbuster Inc., the largest DVD rental chain, filed for bankruptcy last month.

“While we continue to encounter tough market conditions, there are a number of positive trends emerging,” Ron Sanders, head of DEG and president of Warner Home Video, said in the statement. “Blu-ray continues to show strong growth in every category, new release packaged media sell-through is up, and digital distribution is gaining significant momentum.”

Purchases of the high-definition Blu-ray discs increased 80 percent to $1 billion, and new releases also gained, Sanders said in the statement.

Online spending increased 37 percent to $432 million and video-on-demand gained 20 percent to $1.2 billion, the group reported.

Rental Revenue

The group said rental spending declined 4.4 percent to $4.4 billion through nine months, based on revised data supplied by Rentrak Corp.

DVD and Blu-ray kiosk revenue gained 55 percent, a sign of the growing influence of companies including Coinstar Inc., operator of the Redbox rental machines, and NCR Corp.’s Blockbuster Express division.

Netflix, based in Los Gatos, California, said yesterday third-quarter profit increased 26 percent to $38 million, or 70 cents a share, as revenue advanced 31 percent to $553.2 million.

Netflix rose $19.54 to $172.69 at 4:20 p.m. New York time in Nasdaq Stock Market trading, closing at an all-time high.

The company, which lets subscribers rent DVDs by mail or stream movies over the Internet to TVs and computers, is testing a $7.99 a month Web only service in the U.S.

To contact the reporter on this story: Rob Golum in Los Angeles at rgolum@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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