Good News for Home Entertainment as 2012 Draws To A Close

It’s been a tough couple of years for the home entertainment industry. Spending by consumers has dropped significantly since 2009 and there’s been more than a little hand wringing about the future of the business. Yet, as 2013 draws to a close, there seems to be light at the end of the tunnel. As TheWrap reports, spending on home entertainment, whether physical or digital, is on the rise. That’s good news for everybody in the home entertainment supply chain from content owners to interactive studios, digital production service providers to VOD purveyors.

“…[T]the overall market for everything from DVDs to streaming to sales of iTunes copies of movies and TV shows is expected to grow by 5 percent to roughly $18.7 billion, according to projections by IHS Screen Digest. If those estimates hold, that will be the best number for the home entertainment business since 2009.

“It’s been a great year for the industry,” Steve Beeks, co-chief operating officer of Lionsgate, told TheWrap. “We’re seeing renewed growth and strength across all fronts, and consumer spending is up across the board.” Indeed, a strong finish over the holidays could see the once demoralized sector start the new year with a huge injection of confidence. In particular, there is mounting optimism that customers are beginning to embrace purchasing electronic copies of films — just as they had once lovingly stocked DVD and Blu-ray libraries”.

The whole article is well worth reading, since it seeks out comment and insights from several industry veterans about how the entertainment industry hasn’t followed the music and publishing industry to disaster by trying to stave off the digital revolution and changes in consumer behavior which has followed. Of particular focus is the increasing acceptance by consumers of the purchase of non-physical media — digital copies in the form of iTunes downloads, UltraViolet and others. Where some services such as FlixFling.com were offering ‘digital locker’ services as early as 2010, such purchases were not very (or at all) portable. Home entertainment companies (barring Disney, which has not signed on yet) seem to have cracked the dual challenges of portability and of consumer education with UltrViolet. While this seems to be predominantly an offering of blockbuster titles and large studios, I expect that just like Blu-ray, we’ll see this technology become less expensive to license and utilize by the mid-sized and indie distributors and producers within a couple years and UltraViolet, or services like it, will become ubiquitous.

With the uptick in the adoption and consumer acceptance of digital media ownership, the specter of the death of physical media again looms on the horizon. Yet the ‘all or nothing’ scenario isn’t likely to come to pass.

Executives say that rather than one silver bullet, the industry is benefiting from incremental increases from several different sectors across an ever-expanding home-entertainment landscape. Gone are the days when the DVD business was the industry’s major moneymaking behemoth, but in its place has emerged a hydra of daunting intricacy.

“The business has gotten more complex, more fragmented to the point where a number of new distribution channels are proliferating,” David Bi

shop, president of Sony Pictures Home Entertainment, said. “These digital options were nonexistent before, but they are now beginning to help stabilize our industry.”

Audiences just want what they want, when they want it and how they want it. Pretty simple, right? This diverse consumer model translates into multiple areas for revenue for content owners and, behind the scenes, a continuing and growing need for nimble support from the entire supply chain. We live in interesting times.