Online Video Seems to be Cannibalizing DVD, Not Growing the Market

Consumer spending on at-home movie and TV content, exclusive of multichannel TV services, seems to have peaked about 2004, according to IHS Screen Digest (figures are in billions, not millions)

DVD sales and rentals historically have driven the market, with all forms of on-demand delivery remaining a smallish part of the business.

So far, it appears that online delivery, pay per view and video on demand are just cannibalizing the DVD market.

U.S. consumers spent $385 million buying and renting movies using the Internet in 2010 --up 38% from the year before -- surpassing for the first time the amount paid for online television shows.

According to research from IHS Screen Digest, the market for Internet television episode rentals and purchases last year was $366 million. In 2009, spending on online movies and TV was $280 million and $295 million, respectively.

Total revenue from DVD, Blu-ray and digital sales and rentals of movies and television shows in the U.S. declined three percent to $18.8 billion in 2010, according to new data from industry trade organization Digital Entertainment Group.