Streaming Now Accounts for Nearly 85% of Consumer Home Entertainment Spending, DEG Says

Spider-Man: No Way Home (Photo courtesy of Sony Pictures)

Thomas K. Arnold

Consumer spending on home entertainment rose sharply again in the third quarter of 2022, according to estimates released today (Nov. 11) by DEG: The Digital Entertainment Group.

But earnings were, as usual, unfavorable from the subscription streaming sector, while transaction revenues, both physical and digital combined, were down.

Of the estimated total consumer spending of $9.1 billion in the three-month period ended Sept. 30 — a figure that’s up a healthy 13.1% from last year’s third quarter — nearly $7.7 billion, or just over 84%, came from streaming subscriptions. SVOD spending rose 17.3% in the quarter and is up 17.5% for the nine months through September 30 at $22.3 billion. Total consumer home entertainment spending for the first nine months of the calendar year is up 12.2% to an estimated $27 billion, DEG said.

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Transaction revenue fell just under 5% in the quarter to an estimated $1.45 billion. Disc sales and rentals were down 14% to an estimated $497.5 million, while digital sales and rentals were up slightly, at an estimated $956 million from $946.5 million in the third quarter of 2021. Digital sales, or electronic sales (EST), posted and A 9.5% increase in the third quarter to $611 million, while video-on-demand (TVOD) transaction revenue was down more than 11% to $345 million.

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For the first nine months of the year, transaction revenue, both physical and digital combined, was down nearly 8% to an estimated $4.7 billion. Disc sales and rentals slipped 15% to an estimated $1.6 billion, while EST and TVOD revenue fell less than 3% to $3.16 billion. Digital sales for the year, as of September 30, were up 5.2% to an estimated $1.85 billion, while digital rentals were down more than 12% to $1.3 billion.

DEG notes that digital purchases of theatrical titles rose by more than 27% in the third quarter and 21% in the first nine months of the year. Growth was driven by a combination of a 25% increase in the number of theatrical releases and more favorable transaction windows. The box office value of movies released simultaneously to streaming services and the transaction market during the third quarter fell to 19% from 32% in the third quarter of 2021, DEG said.

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In the one bright spot for physical media, DEG estimates that consumer spending on 4K UHD Blu-ray titles grew 33% in the quarter and nine-month period, led by Sony Pictures’ Spider-Man: No Way Home.

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