US DVD and Blu-ray market, H1 2009

There's more intelligence for the first half of 2009 to report, this time concerning the US home entertainment market. But first here's a related item from earlier in the week when the International Intellectual Property Alliance (IIPA), a coalition of trade associations representing U.S. copyright-based industries (video games, business software, film, TV, music and publishing), released its twelfth economic study, covering the period 2003-2007.

The report, Copyright Industries in the U.S. Economy: The 2003-2007 Report, was prepared for IIPA by Stephen Siwek of Economists Incorporated. In presenting the key findings, IIPA’s press release leads with news that the real annual growth rate of the copyright industries stood at more than twice that seen by the U.S. economy as a whole in the years 2004-2007, and that in 2007 the core copyright industries contributed 23% of the real growth achieved for the US economy as a whole. In other words, the copyright industries are a key driver of the wider economy.

The IIPA hopes these numbers, along with others in the report detailing the copyright industries’ contribution to employment and the US trade balance, will help to secure continued government support for anti-piracy measures. To this end the study was launched at an event at the US Department of Commerce, attended by Secretary of Commerce Gary Locke. 

Eric H. Smith, of the IIPA, makes the case:

“This study, like those that preceded it, strongly supports the continuing need for our government to focus its full attention on the economic and social importance of the creative industries within our 21st century economy.  Because these industries that depend on creativity and innovation contribute so significantly to economic growth and job creation in today’s economy, our government, and governments throughout the world, must redouble their efforts to provide a safer environment for them to prosper.”

Smith goes on:

“Only through the legal and secure transmission of valuable copyrighted content over the Internet can this continued growth and productivity be fully realized. Piracy threatens that growth and all governments must redouble their efforts to combat it.”   

Far be it for me to belittle this contribution to what is clearly an important and highly charged debate, but I can’t help feeling representatives of the copyright industries need to take care when making their case. After all, the report presents a slew of impressive numbers. But wasn’t this growth achieved against a backdrop of rampant piracy? Given the horror stories we’ve been fed about the scale of piracy over the years, it’s hard to imagine the problem will get any worse, especially now that authorised  online distribution channels are taking off, and illegal ones (like The Pirate Bay) are turning legit. In making the case for how vital the copyright industries are, there is surely a danger in over-selling their success.

Be that as it may, the news from one sector of the US copyright industries, rental DVD and Blu-ray, looks positive for the first half of 2009. According to data from Rentrak and reported by Marcy Magiera writing in Video Business, consumer rental revenue for DVD and Blu-ray rose 8% to $3.4 billion in the first half of the year compared with the same period in 2008. Growth was driven by consumer interest in Blu-ray and by the roll out of rental kiosks offering over night DVD rental fees for as little as $1.

Meanwhile, data released by the Digital Entertainment Group (DEG), once again reported in Video Business, shows overall US home entertainment revenues fell by 4% in the first half of 2009. There was a steep decline in DVD retail revenues (down 17% according to Video Business calculations), although this was offset to a large degree by rising Blu-ray sales (up 91%), the growth in rental activity (described above) and online distribution (up 21%).

DEG puts the US home entertainment market at $9.73 billion for the six months to the end of June 2009, which includes nearly $1 billion in digital sales and rentals (including cable and satellite VoD).

Against this backdrop, isn't it time industry reps started to bang the drum more loudly about the opportunities offered by digital channels, rather than the threats?

Comments

[Felix Chesterfield]

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