(Reuters) – Hollywood may be seeing a turnaround in a seven-year decline of home video sales, thanks
to double-digit sales growth of Blu-ray discs and online movies and TV shows, an industry trade group is expected to announce
on Sunday night.
The Digital Entertainment Group, a trade group whose members include studios, consumer electronic
companies and others, will report that U.S. consumers spent $4.5 billion (2.7 billion pounds) on home entertainment in the
first quarter this year, an increase of 2.5 percent from a year ago.
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That’s the second quarter of growth in the last
three quarters for home entertainment spending, which includes purchases and rentals of DVDs, Blu-ray discs and online, as
well as subscriptions to services like Netflix.
Overall spending declined on those items by 2.1 percent in 2011, to
$18 billion, the seventh consecutive year of decline, according to data on the group’s website.
“The business feels
as if it has begun to stabilize,” said Ron Sanders, president of Warner Home Video and DEG president. “Hopefully, we’ve hit
bottom.”
Sales of Blu-ray discs surged by 23 percent, the group said. That growth was spurred by strong Christmas
sales of Blu-ray players, continued video sales of holiday releases like the hit “Kung Fu Panda 2” and the February release
of the blockbuster “The Twilight Saga: Breaking Dawn – Part 1.”
Blu-ray growth partially offset the continued decline
in DVD sales. Packaged good sales, which include both formats, fell by 0.6 percent from a year earlier, to $2.1
billion.
Home sales of film and TV shows reversed that decline, and increased by 0.5 percent if sales through
electronic outlets such as Apple’s iTunes service are included. Consumers purchased $165 million of those so-called
electronic sell-through products.
The industry’s largest growth engine continues to be online subscriptions, such as
those offered by Netflix, which grew five-fold in the quarter, to $548.6 million.
Most of that online subscription
growth appears to come from Netflix customers who chose subscriptions for streaming over its traditional DVD by mail service
when the company split the two options last year. Nationwide, DVD subscription sales fell by $322.8 million in the
quarter.
Industry officials expressed optimism that growth will continue, based on continued sales of Blu-ray players
and introduction of the studio-backed UltraViolet service by which consumers can buy movies that are shared among several
cloud-connected devices. Nearly 2 million users have signed up since the serviced was introduced late last year, DEG
said.
“We believe we’re at an inflection point,” said David Bishop, president of Worldwide Sony Pictures Home
Entertainment. “We’ve created an installed base that will grow, and which we think will continue to give us
momentum.”
(Reporting By Ronald Grover; Editing by Sandra Maler)
(An earlier
version of this story was transmitted in error.)