Home Entertainment Spending Continues Upsurge in First Half

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A five-fold spike in consumer spending on streaming services drives a 1.4 percent gain over same period last year, according to DEG report

The turnaround in home video business, which began last year after a seven-year decline, continued in the first six months of 2012.

An explosion in subscription streaming was the driving factor as consumer spending on home entertainment hit $8.4 billion in the first six months of 2012 – a 1.4 percent gain from the same period last year — according to new figures released Sunday from the studio-backed Digital Entertainment Group.

U.S. consumers spent $3.96 billion to buy or rent TV movies and TV shows in the second quarter this year, just 0.3 percent more than a year earlier, but it is the third quarterly gain posted in the last four.

Also read: Home Entertainment Rebounds, Driven by Online Subscriptions

The trend is welcome news for Hollywood and the studios, who often make as much on ancillary revenues like DVDs and streaming with movies as they do at the box office.

The five-fold spike in subscription streaming is largely due to Netflix’s shift away from CDs. Spending on subscription streaming hit $548.6 million in the first half of 2012, up from $85 million in the first six months of 2011.

Overall subscription revenue for the first six months was $896.6 million, up 18.6% from $755.8 million at the same juncture last year.

Also read: Netflix Beats Analysts' Bets, But Stock Drops Double Digits

For the first time, digitally delivered movies topped movie rentals in the second quarter, with consumers spending $1.2 billion on streamed movies, an 81 percent increase.

Consumers spent nearly $1.1 billion renting DVDs in the second quarter from stores and kiosks, a 27 percent decline.

A 13.3 percent rise in spending on Blu-ray discs, especially sales from catalogs which were up 26 percent, helped the upswing, too.

TV viewers spent $478 million through video on demand services from cable and satellite. VOD was up 11.6% from the first half of 2011.