DEG Report: Home Entertainment Biz Down Just 0.7% in Q2

Small decline comes after 8% drop in first quarter, according to industry trade group

Last Updated: July 19, 2010 @ 3:49 PM

The home entertainment business' freefall appears to be slowing down.

Industry trade consortium the Digital Entertainment Group released figures Monday showing that revenue from sales and rentals of DVDs, Blu-ray discs and digital downloads dropped just 0.7 percent in the second quarter of this year, after dropping 8 percent in the first quarter.

Overall, the business is down 3.3 percent at the midway point of this year to $8.8 billion.

Notably, disc sales dropped only 3 percent in the second quarter, the smallest quarterly drop for packaged home-entertainment media in several years.

Continuing an ongoing — and foreboding — trend, the revenue continued to trend down in the first half of the year, despite the fact that overall rental and sales transactions increased by 2.3 percent.

Low-margin rentals by vendors including Redbox and Netflix continue to have an effect on the profitability of the business.

While the DEG continued to tout the growth of Blu-ray — sales of the hi-def discs were up 84 percent to $733 million in the first half of 2010 — the format's market share remains small compared with DVD more than four years after launch.

Likewise, sales of digital downloads increased nearly 37 percent to $285 million in the first half of this year, accounting for only a small portion of the overall business.