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The Digital Bits presents: The State of Physical Media in 2020 (Mid-Year Edition)

August 20, 2020 - 1:17 pm   |   by
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All right, we have a new update on the health of the home entertainment market from the Digital Entertainment Group (DEG) for the first half of 2020. And the numbers are not entirely unexpected...

According to the DEG, total home entertainment spending (all categories) was up about 26% for the first half of 2020 (through the end of June) compared to the same period last year.

Total digital spending was up 36% during that period (the specific breakdown was +33% for electronic sales, +33% for VOD, and +37% for subscription streaming). That’s the good news.

The bad news—which by now should not be unexpected—is that packaged goods (read: discs) were down 17.2% in the first half of this year from the same period in 2019. Specifically, Q2 2020 was down 11.11% from Q2 2019, this after a 22.4% decline in Q1 2020 (as we reported here back in early July). [Read on here...]

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This is pretty close to what we predicted here at The Bits at that time, when (based upon Media Play News weekly market data) we calculated roughly a 10.12% decline in packaged goods (discs) for Q2. The DEG numbers represent a more complete poll of actual transaction data from DEG member companies, so with those factored in the drop increased just a bit.

Here’s a rundown of other notables from the DEG’s Mid-Year 2020 Home Entertainment Report (found here)...

  • For the first six months of 2020, total consumer spending on digital formats (including EST, VOD and SVOD subscription streaming) was strong, rising 37 percent from the same period in 2019 while subscription streaming alone also climbed 37 percent.
  • Consumer demand for theatrical releases continued to grow robustly across digital formats, as numerous wide release movies came early to the home. Spending on theatrical EST rose 48 percent in the second quarter and 26 percent in the first half. Spending on theatrical VOD, meanwhile was up 73 percent for the second quarter and 55 percent for the first half.
  • Theatrical catalog titles showed particularly strong growth, with EST and VOD spending on these titles growing 66 percent in the second quarter.
  • The TV category also experienced robust growth, with spending rising 120 percent on VOD and 72 percent on EST in the second quarter.
  • Internet-delivered VOD grew 76 percent in the second quarter and 56 percent in the first half as service options continue to proliferate and are embraced by consumers.
  • Consumers interest in DVDs reignited, slowing the disc format’s decline. After years of double-digit declines, spending on DVDs was off just 6 percent YOY in Q2. Wallet-conscious consumers embraced product with price points below $10 and theatrical catalog under $6 especially was in high demand, posting a 3 percent YOY growth in the second quarter.
  • Top titles during the second quarter include Bad Boys for Life, Star Wars: The Rise of Skywalker, Sonic the Hedgehog, Harley Quinn: Birds of Prey, Jumanji: The Next Level, Bloodshot (2020), 1917, Dolittle and The Call of the Wild (2020).

For the record: EST=Electronic Sell-Thru, VOD=Video on Demand, SVOD=Subscription Video on Demand (aka streaming)

Now then, let’s look ahead to Q3 via the weekly data from Media Play News (you’ll find our look at Q1 and Q2 here)...

Weekly Disc Sales Revenue (Q3 2020 – all formats)

  • 7/4 – disc sales down 20.66% from the same week in 2019
  • 7/11 – disc sales down 10.96%
  • 7/18 – disc sales down 35.01%
  • 7/25 – disc sales down 23.09%
  • 8/1 – disc sales down 17.53%
  • 8/8 – disc sales down 27.13%
  • 8/15 – TBA
  • 8/22 – TBA
  • 8/29 – TBA
  • 9/5 – TBA
  • 9/12 – TBA
  • 9/19 – TBA
  • 9/26 – TBA
  • AVERAGE Q3 (so far) = down 22.39%

Again, compare this to Q1 2020 (down 22.4%) and Q2 2020 (down 11.11%). So it seems likely that the current downward trend for discs will continue though the end of Q3. We don’t yet know what kind of holiday shopping season there’s going to be this year, which is a wildcard. But we do know that we’re in the middle of an ongoing pandemic and economic downturn. So it seems likely that holiday shopping will be generally depressed as well.

It’s far too early to make a prediction for 2020 as a whole, beyond saying that physical media seems likely to be down by double-digits again this year, even as the transition to digital accelerates, and cord-cutting continues. Do keep in mind that physical media has declined by roughly double-digit percentages every year since 2012, so again this is not really a surprise.

And that’s where we are for now. For more information, please visit the Digital Entertainment Group and Media Play News. Our thanks to everyone at each for their hard work.

As always, stay tuned...

(You can follow Bill on social media at these links: Twitter and Facebook)



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