DEG RELEASES FIRST QUARTER HOME ENTERTAINMENT RESULTS
Blu-ray Disc Sales Are Up More than 100 Percent

Tremendous Gain of Blu-ray and Digital Downloads Offsets DVD Decline

The Home Entertainment Window’s Net Contribution to the Studios
is Down Less than Four Percent


LOS ANGELES (April 27, 2009) – DEG: The Digital Entertainment Group released first quarter U.S. sales figures for the home entertainment industry today.  Consumer spending for the first quarter 2009 in the home entertainment window for pre-recorded entertainment, which includes DVD, Blu-ray Disc and digital distribution, was $5.3 billion, off by five percent compared to the same period last year. The home entertainment window’s net contribution to the studios was down less than four percent for the quarter. 

The DEG compiles quarterly sales data for various products within the home entertainment category, including Blu-ray, DVD and HDTV.  The industry association compiles its data based on input from member companies, retailers and industry association tracking sources.   
 
The DEG announced that, while consumer spending was down in the first quarter of 2009, the number of consumer transactions remained constant at 898 million (flat against the previous year), underscoring that the demand for home entertainment remains high. The home entertainment sector has remained remarkably resilient, particularly with first quarter growth of Blu-ray up 105 percent to $230 million and digital distribution up 19 percent to $487 million for the period.  The Hollywood-based trade group also noted that the Easter holiday often sees a spike in gift buying, which was in March in 2008, was not in first quarter this year.

“People are choosing new ways to consume entertainment, but there is no clear evidence of a long-term change in consumer behavior,” said Ron Sanders, President, DEG and President, Warner Home Video. “What we are very likely seeing here is an understandable consumer reaction to the difficult financial times in which we find ourselves.”

While no business is immune to these challenging market conditions, higher margin businesses like Blu-ray and digital distribution are providing an increased overall contribution from pre-recorded home entertainment.
Although sell through of standard DVD was down 14 percent to $2.89 billion in the first quarter, as stated Blu-ray was up 105 percent and digital distribution was up 19 percent for the same period. Rental transactions and spending for DVD and Blu-ray were up one percent for the first quarter.  When looking at year-to-date, combined Blu-ray Disc and DVD revenue was off nine percent to $3.35 billion. 

In an environment where the U.S. Department of Commerce reported a downturn in all retail and food services businesses of 9.4 percent for March 2009 over March 2008, the home entertainment window remains quite stable, down less than four percent over the course of the entire year from first quarter 2008 to first quarter 2009.

“When considering that this all has been achieved in the worst recession ever, it is clear that home entertainment’s stability is fueled by Blu-ray’s popularity,” said Bob Chapek, Chairman, DEG and President, Walt Disney Studios Home Entertainment.  “Blu-ray’s tremendous performance can be attributed to its unsurpassed picture and sound quality.  Moreover, we remain confident that demand for Blu-ray will continue to grow given that it is a revolutionary platform.”

BLU-RAY DISC SALES
According to figures compiled by the DEG with input from content providers and retailers, Blu-ray Disc sales were hugely popular at retail with sales up some 105 percent.  According to figures compiled by Swicker & Associates on behalf of the DEG, nearly 20 million Blu-ray discs shipped to retail in the first quarter of the year – a growth of 108 percent over the same period last year.  Sales of all Blu-ray compatible devices, including set-top players, PC drives and PlayStation 3 consoles are now in more than 10.5 million U.S. homes. 

BLU-RAY DISC SOFTWARE SHIPMENTS IN U.S. & CANADA (in millions)

QUARTER
2006
2007
2008
2009
1st Quarter
 
1.694
9.220
19.166
2nd Quarter
 
3.542
12.616
  
3rd Quarter
 
3.214
12.718
4th Quarter
1.262
9.540
28.6
YEARLY
TOTAL
1.262
17.99
63.154
19.166
TOTAL
(since launch)
 
 
 
101.972
*Figures compiled by Swicker & Associates on behalf of DEG: The Digital Entertainment Group

HDTV SALES EXPERIENCE MORE GROWTH
According to figures compiled by the DEG based on data from CEA, retailers and manufacturers some 55 million HDTVs have sold to consumers.  With some 4.7 million HDTVs selling in the first quarter, U.S. household penetration is at approximately 42 million.  Nearly 25 percent of all HDTV owners have more than one set. 

DVD TITLE SHIPMENTS FOR FIRST QUARTER
In the first quarter 2009, 312 million DVDs shipped to retail according to figures compiled by Swicker & Associates on behalf of the DEG.  More than 10.5 billion DVD discs have shipped to retail since launch in 1997.    

 

DVD-VIDEO SOFTWARE SHIPMENTS IN U.S. & CANADA (in millions)

QUARTER
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
1st Quarter
N/A
3.3
11.1
29.0
69.2
120.1
231.7
332.2
403.0
395.8
372.0
344.7
312.6
2nd Quarter
N/A
4.1
13.9
33.2
81.7
152.2
195.5
316.8
369.1
346.1
297.1
315.8
 
3rd Quarter
2.3
5.9
29.0
42.7
75.9
153.3
214.6
340.9
347.9
343.3
314.7
293.0
 
4th Quarter
3.2
11.8
44.0
77.5
137.6
259.4
381.5
528.4
536.7
571.4
662.2
453.6
 
YEARLY TOTAL
5.5
25.1
98.0
182.4
364.4
685.0
1,023.3
1,518.3
1,656.9
1,656.6
1,646.0
1,407.1
312.6
TOTAL SHIPMENTS
(since launch)
 
 
 
 
 
 
 
 
 
 
    
10,581.0
Figures compiled by Swicker & Associates on behalf of DEG: The Digital Entertainment Group

DVD U.S. HOUSEHOLDS TOPS 92 MILLION
According to figures compiled by the DEG based on data from CEA, retailers and manufacturers, more than five million DVD players sold to U.S. consumers in the first quarter of 2009. 

Since launch in spring 1997, some 258 million DVD players, including set-top and portable DVD players, Home-Theater-in-a-Box systems, TV/DVD and DVD/VCR combination players, have sold to consumers, bringing the number of DVD households to approximately 92 million (adjusting for households with more than one player).  The DEG estimates that some 64 percent of DVD owners have more than one player.

DVD HARDWARE SALES IN U.S. (in millions)

QUARTER
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
1st Quarter
.030
.094
.358
1.350
2.220
3.565
4.858
6.855
7.741
7.852
8.350
5.3
5.2
2nd Quarter
.079
.149
.611
1.435
2.404
3.750
5.506
6.057
6.006
6.676
6.396
4.98
 
3rd Quarter
.077
.244
.880
1.550
2.537
4.740
6.470
6.593
6.250
6.831
6.139
5.2
 
4th Quarter
.119
.459
1.701
5.542
9.501
13.058
16.900
17.621
14.343
12.512
12.633
9.5
 
YEARLY
TOTAL
.305
.946
3.550
9.877
16.662
25.113
33.734
37.126
34.340
33.871
33.518
24.9
 
TOTAL
(since launch)
 
 
 
 
 
 
 
     
 
 
258.0
*Includes set-top and portable DVD players, Home Theater-in-Box systems, TV/DVD and DVD/VCR combination players
DEG: Digital Entertainment Group

DEG: The Digital Entertainment Group is a Los Angeles-based, industry-funded nonprofit corporation that advocates and promotes the many benefits associated with physical and digital entertainment while providing updated information to both the media and the retail trade. The DEG offers a forum for member companies to engage in ongoing discussions concerning various opportunities, which relate to other new digital technologies, the environment and other emerging topics. The DEG can be reached at 310-888-2201, via email at getinfo@digitalentertainmentinfo.com or through its Web site at www.degonline.org.

The DEG membership is comprised of 3ality Digital, AGI Media, AGI Polymatrix, Anchor Bay Entertainment, Arvato Digital Services, Ascent Media/Blink Digital, Bertelsmann Direct North America, Blockbuster, Capgemini, CinemaNow, Cinram, Cryptography Research, D&M Holdings, Deloitte, Deluxe Digital, Digeo, DivX, Dolby Laboratories, DTS Entertainment, DV&A, HBO Home Entertainment, Image Entertainment, Ingram Entertainment, JVC Company of America, JVC Disc America, LG Electronics, Lionsgate, Macrovision, Media Control GfK, Memory-Tech, Meridian, MGM Home Entertainment, Microsoft, MOD Systems, Monster Cable, Netflix, Nielsen Entertainment, NPD Group, Panasonic Consumer Electronics, Panasonic North America, PaperFoam, Paramount Home Entertainment, Philips Electronics, Pioneer Electronics (USA), RCDB, Redbox, ScreenPlay, Sharp Electronics, Sonic Solutions, Sony DADC, Sony Electronics, Sony Music Entertainment, Sony Pictures Home Entertainment, Summit Entertainment, Technicolor, Teradata, THX, Toshiba America Consumer Products, Twentieth Century Fox Home Entertainment, Universal Operations Group, Universal Studios Home Entertainment, Walt Disney Studios Home Entertainment, Warner Home Video and Wynalda Litho.  


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