LOS ANGELES – Americans spent more money renting home movies than buying them in the second quarter, marking only the second time that’s happened in the DVD era. The big switch in consumer behavior shows the rising popularity of cheap alternatives like Netflix and Redbox and suggests people are pinching pennies in this economy.
Rental revenue rose 11 percent from a year ago to $2.06 billion, while sales of discs and digital purchases fell 15 percent to $1.93 billion in the three months through June, according to a report released Friday by The Digital Entertainment Group, an industry consortium of studios and electronics makers.
The resurgence of rentals is noticeable mainly because the DEG started including subscription plans such as Netflix’s in the rental category this year, said executive director Amy Jo Smith. Still, she said consumer behavior is changing.
“It’s not just from sell-through to rental. But people are looking at different ways of consuming media at home,” she said.
The last time rental revenues beat purchases was in 2000, before people slowed their rentals of VHS tapes from rental video shops like Blockbuster and began buying more DVDs — which at around $20 seemed like a bargain. The DVD first came out in 1995 and led to a revolution where people replaced their home libraries of video cassettes for the thinner, lighter discs that lasted longer, giving a huge boost to movie studios’ profits.
Broadband Internet access and connected devices that put high-definition movies onto the big screen in the living room have left the DVD looking quaint. Blockbuster went bankrupt before being bought by Dish Network Corp. in April.
Alternatives such as Netflix Inc.’s streaming service or $1-a-night rental kiosks such as Redbox have “taken a pretty big (bite) out of purchasing,” said Tom Adams, principal analyst and director of U.S. media for IHS Screen Digest.
Adams said purchases will make a comeback around the winter holidays, however.
He expects purchase revenue, including of movies, TV shows and video on high-definition Blu-ray discs to reach $9.9 billion this year, versus $8.1 billion for all rentals. The rise of rentals is not slowing down, though. Adams sees rental revenue topping purchases on an annual basis in 2014 by $9.3 billion to $8.5 billion.
Eureka, Calif.: 6:28 p.m. PDT
Yellow band shows where sun will appear as a ring. North and south of it, sun will appear as crescent. Michael Zeiler/Eclipse-Maps.com.
