Sales of Blu-rays and DVDs fell by 25.32% last year, while digital home entertainment grew by 19.29%. The box office showed signs of recovery but remains notably lower than pre-covid years.
The full-year data released this month by the DEG (Digital Entertainment Group) reveals that the home entertainment market continues to grow at an impressive rate.
- "Overall U.S. consumer spending across digital and physical home entertainment formats in 2023 was $43 billion, a 16.8 percent increase from the almost $37 billion consumers spent in 2022, driven by the continued growth of SVOD, as well as theatrical new releases offered for digital purchase in premium and traditional windows," said the DEG.
Growth accelerated in the fourth quarter of 2023, with total sales up by 20.25%.
4x larger than theatrical market
Home entertainment is now more than four times bigger than the theatrical market in the US. The margin would be even bigger if factoring in the ad revenue generated by streaming services, which totaled $17.2 billion last year.
The US theatrical market rebounded to $9.57 billion, marking a 30.19% increase compared to 2022. However, box office spending still lags significantly behind pre-covid levels. In 2019, US box office spending exceeded $11 billion.
Disc sales decline further
The power dynamics have shifted significantly due to a remarkable surge in consumer preferences towards home entertainment. In 2019, home entertainment surpassed the theatrical market in the US "only" by a ratio of two to one. The surge is driven mainly by subscription streaming services such as Disney+ and Netflix.
However, not all segments of home entertainment are experiencing growth. Sales and rentals of DVD, Blu-ray, and UHD Blu-ray discs declined by a further 25.32% from $2 billion to $1.56 billion annually. In 2014, sales of discs in the US exceeded $10 billion.
However, the DEG noted that sales of UHD Blu-ray discs were up 15% in the fourth quarter, driven in part by Oppenheimer.
Meanwhile, consumers are spending more money buying and renting movies online from services such as Apple TV, Google Play Movies and Vudu. The most popular titles are highlighted in the table.
Highlights from 2023
| In the DEG's own words:
U.S. consumer spending on subscription streaming rose above $10.1 billion in fourth quarter 2023, with robust growth of almost 25 percent.
Consumer spending on digital purchases (EST) in premium and standard windows continued to grow in the fourth quarter, with purchases rising 7 percent overall and more than 30 percent for theatrical titles, driven by strong home demand for some of the year’s biggest box-office performers, including Barbie, The Hunger Games: The Ballad of Songbirds and Snakes, Indiana Jones and the Dial of Destiny, Mission Impossible: Dead Reckoning Part 1, Oppenheimer, and The Super Mario Bros. Movie. Spending on digital purchases of theatrical titles was up more than 13 percent for the full year.
The title slate also drove growth in digital rentals during the final quarter of the year, with overall consumer spending up 11.5 percent and theatrical title spending up 15 percent. Growth in digital rentals (VOD) is also reflective of continued cord-cutting and changing consumer behavior: Internet-delivered rentals were up 18 percent while cable/satellite rentals fell almost 20 percent.
The strong quarterly performance in theatrical new releases also benefited premium physical formats, with spending on purchases of 4K UHD Blu-ray titles up 15 percent for the quarter. Fans seeking to watch Oppenheimer at home in the best picture quality possible reportedly drove retail shortages of the title.
Spending on physical disc rental fell by more than 50 percent in the fourth quarter, following Netflix’s September exit from the physical subscription business. As a result of this physical rental sector shrinkage, DEG reports going forward in 2024 will tally only sell-through of physical disc product.
Among the full year’s best-performing titles across all transactional formats, were Avatar: The Way of Water (Disney), Dungeons & Dragons: Honor Among Thieves (Paramount), Equalizer 3 (Sony), The Flash (WBD), Guardians of the Galaxy Vol. 3 (Disney), John Wick: Chapter 4 (Lionsgate), Meg 2: The Trench (WBD), Plane (Lionsgate), Puss in Boots: The Last Wish (Universal), Spider-Man: Across the Spider-Verse (Sony), The Super Mario Bros. Movie (Universal), and Transformers: Rise of the Beasts (Paramount).
Ad-supported premium AVOD and FAST content reached an estimated advertising revenue of $17.2 billion in 2023 according to estimates from Omdia, as more major streamers diversified their offerings to include lower cost subscription plans with ads. Omdia estimates show ad revenue grew by more than 10 percent for the full year. In the final quarter of the year, revenue from |
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