U.S. Movie Rentals Grow, Purchases Decline

Revenue from U.S. movie rentals increased 11 percent from 2010 to 2011, reaching $2.06 billion, according to the Digital Entertainment Group. Sales of discs and digital purchases dropped some 15 percent to $1.93 billion from June 2010 to June 2011.

Purchases of movies, TV shows and video on Blu-ray discs are projected to total $9.9 billion in 2011, as opposed to $8.1 billion for movie rentals, according to IHS Screen Digest. Movie rental revenue will surpass movie sales revenue annually during 2014 by $9.3 billion to $8.5 billion, IHS Screen Digest estimates. Read more here.

The last time rental revenues beat purchases was in 2000, before people slowed their rentals of VHS tapes from 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. That gave a huge boost to movie studios' profits.

Alternatives such as the Netflix 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.

Blu-ray Disc spending is up more than 10 percent and overall consumer spending on home entertainment is
down five percent, despite a 16 percent drop in box-office for titles that entered the home entertainment window in the first half of 2011, according to the Digital Entertainment Group.

While first quarter 2011 home entertainment spending was down 6.4 percent, second quarter spending was down only 3.6 percent.

Read more here.