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17 Sept. 2008 //Sorry digital downloads, physical media is still king, According to a new NPD Group study, physical media is still king despite the flat growth of standard definition DVD sales, and digital downloads will continue to lag behind.

The report says the average U.S. consumer will spend 80 percent of his entertainment budget on buying or renting physical media (DVD, Blu-ray) and that only 0.5% of the average American’s entertainment budget is spent on digital downloads (full downloads, streaming of movies or TV).

The results were based on answers from 11,000 consumers and was presented yesterday at the DisplaySearch HDTV 2008 conference in LA.

“Everyone is guessing when video on demand (VOD) and digital downloads will spell the end for packaged media,” said Russ Crupnick, senior industry analyst for entertainment with The NPD Group. "At this point, digital video is still an extremely small part of overall consumer entertainment spending."

To get more specific, the report showed that of of money budgeted for movies and video, 41 percent was spent on purchasing DVDs/Blu-rays, 29 percent was spent on DVD rentals (most notably Netflix), 18 percent was spent on going out to the movie theaters, while the remaining percentage was spent on buying TV boxsets on DVD/Blu-ray.

How did the average consumer watch a full-length movie in the past three months? 67 percent watched a DVD/Blu-ray they already owned, 50 percent rented, and 18 percent opted for Video-on-Demand. Only 2 percent paid for a digital download from services such as iTunes or Amazon VOD.
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16th Sept, 2008 // Reports of DVD death greatly exaggerated, Online sites YouTube and Hulu stream billions of videos every month and attract millions of viewers, but when it comes to buying movies and television shows, consumers are still decidedly old school.

A new report from market researcher NPD Group shows that $8 out of every $10 spent on movies goes to buying and renting DVDs.

The findings, presented today at the DisplaySearch HDTV 2008 Conference in Hollywood, indicate that 41 cents of every dollar the consumer budgets for movies and TV shows goes to buying a DVD, and 11 cents goes to purchasing a season’s worth of TV shows on DVD.

An additional 29 cents out of every dollar is spent on DVD rentals, which suggests that Blockbuster isn’t about to go out of business anytime soon, despite the growing popularity of Internet video.

By contrast, digital rentals and purchases, through services such as Apple Inc.’s iTunes or Amazon.com’s new online streaming video service, account for just 0.5% of consumer spending on renting or buying movies and TV shows. The results were based on a survey of more than 11,000 consumers and balanced to reflect the Internet-connected U.S. population age 13 and older.

"I think there’s a big difference between looking at things on YouTube or getting the content for free online versus paying to watch a movie or a television show," said Russ Crupnick, NPD senior entertainment analyst. "My guess is it’s going to take some time for people to latch on to that behavior."

That’s not to minimize the strong growth of video-on-demand services or digital downloads, said Danny Kaye, executive vice president of 20th Century Fox Home Entertainment. Apple, for example, said in June that its customers were renting and purchasing more than 50,000 movies every day through iTunes.

Nonetheless, plasic discs continues to rule the day, in part because habit still trumps hot technology. For a majority of Wal-Mart Nation, it’s still preferable to pick up a DVD at a local retailer or supermarket than to spend a couple of hours downloading it off the Internet.

Although DVD sales are likely to remain flat this year, Kaye believes spending on new, high-definition Blu-ray discs will restore the studios’ packaged media business to growth within two years.

-- Dawn C. Chmielewski