After a grueling year that saw double-digit declines in the DVD sell-through market, studio executives are trying to think positively in their predictions for the new year, and point to several indicators that their hopeful attitudes are justified.
Some Hollywood execs feel, for example, that the deep recession the country—and by extension the industry—found itself mired in this year caused a steep but impermanent decline in spending. According to Lori MacPherson, GM, North America, for Walt Disney Studios Home Entertainment:
“There has been a lot of discussion about whether the changes we are seeing in the industry are cyclical or secular. . . And sales trends show that declines in consumer spending were absolutely timed to the worsening of the economy.”
Ron Sanders, president of Warner Home Video and president of The Digital Entertainment Group (DEG) feels that when growth in the digital delivery and Blu-ray formats are considered, overall home entertainment consumption has never been higher. Says Sanders:
“It’s been a roller coaster of a year in home video, but consumer demand for content is as strong as we’ve seen it. . . Rental activity has gained in this economic environment, which you’d expect, but so have Blu-ray and high-priced catalog sets. And digital continues its very strong growth.”
Blu-ray (and its upcoming 3D capability) is a particularly promising area of the market to Hollywood execs. The format defied economic trends this year and sold more than three million players in the first nine months of 2009 alone (final quarter results are not expected until the end of January). David Bishop, president of Sony Pictures Home Entertainment, is bullish on the format:
“We’re looking at overall spending on home entertainment packaged media to come in at just over $20 billion, which would be off around 4% from 2008. . . DVD is down nearly 7%, but Blu-ray is up 50%, which is helping to close some of the gap left by DVD.”
Studio chiefs are hoping that the 2009 surge in rentals, partly spearheaded by oft-maligned Redbox, will subside as consumers once again become accustomed to purchasing films. Says Bishop:
“The business is definitely being affected by the recession. . . It has brought about the ‘trading down’ to lower-cost rentals and subscription services and contributed to the first growth in the rental business in nearly 10 years.”
Disney’s MacPherson is taking a more measured view on the industry’s hopes of a widespread reversion to a model dominated by sell-through:
“As consumers become more cost-conscious, they begin to make changes in their behavior and those changes don’t automatically revert as the economy strengthens. . . As an industry, it’s up to us to keep making great content, to leverage new technologies to add value and create exciting new experiences in the home entertainment window, and to provide good value for consumers’ hard-earned dollars. We need to do all those things and market them well, and that will enable us to drive future growth.”
Insiders, what do you think 2010 is going to bring for the home entertainment market? Will Blu-ray and 3D take off and help outpace DVD’s decline, as Hollywood hopes? As the economy recovers and consumers begin to loosen their purse strings, will Redbox flourish or flounder? Put on your prognosticating caps and give us your predictions in the comments.
[via Home Media Magazine]