As US viewers are discovering the benefits of streaming video, the revenue from VOD has not yet offset the resulting drop in DVD sale revenue, which was their top earner for more than a decade now, according to SNL Kagan.
The year 2010 was similar to 2009 in that the domestic box office hit a record high, once again, while the US video retail market was continuing its steady decline as consumers alter their home video viewing habits. Consumers are now opting to sign up for streaming and/or rental services, such as Netflix Inc. They are using VOD services more and more.
The bad news for the studios is that increasing VOD revenue does not yet compensate for the drop in DVD rental and sales income. A parallel with the music industry is easily drawn, where income from download and streaming services is much lower than that of physical CD sales. The only difference between the two is that music fans now buy individual tracks rather than whole albums – and with movies it is not very likely that viewers will only buy certain chapters.
SNL Kagan tracked 415 titles in its database that were released on DVD in 2010, and among those titles, wholesale revenue dropped a shocking 43.9% from $7.97 billion (€5.59 billion) in 2009 to $4.47 billion in 2010. For the full overview see the SNL Kagan blog.
