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Movie Rentals Down 10% in First Half of 2012

August 31, 2012

People are renting fewer full-length movies as they shift from physical to digital media, according to a report by The NPD Group: The total number of movies rented by Americans in the first half of 2012 fell 10% from the same period a year earlier.

Rental of physical discs is still dominant, but is becoming less so.

Rental of physical DVDs and Blu-ray discs (BDs) via kiosks, brick-and-mortar retailers, and Netflix Movies by Mail accounted for 62% of movie rental orders in the first half of 2012, whereas digital movie rentals—including subscription streaming, pay TV VOD, and Internet VOD—accounted for the other 38%.

Even so, year-over-year disc rentals from all sources declined 17%, whereas digital movie rentals (e.g., Comcast and iTunes) increased only 5%.

Other findings from The NPD Group's "VideoWatch VOD," for the first half of 2012:

  • Within the physical disc market, kiosks continued to extend their lead, with rental orders growing 5% over 1H11 levels.
  • Kiosk rentals accounted for 45% of the physical market, as rentals from brick-and-mortar stores continued to fade.
  • Online, subscription streaming leader Netflix made up a hefty 66% of digital movie rentals.
  • Video-on-demand via paid cable and satellite services accounted for 28% of digital orders.
  • Internet providers such as iTunes and Vudu accounted for just 6% of digital rentals.

"Kiosk and subscription Internet streaming are generating strong user satisfaction ratings, including future rental intent, price, and value, which is reflected in market-share gains," said Russ Crupnick, senior vice-president of industry analysis for The NPD Group.

"Netflx is frequently the most popular video application on connected devices, so an increase in households with Web-connected Blu-ray Disc players, tablets, and smart TVs will lead to still more video streaming activity."

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  • by Paul G Fri Aug 31, 2012 via web

    I may be off base, but i wonder how much of the decline in movie rentals, particularly in brick and mortar stores is a chicken and egg story. Blockbuster has closed all of their stores within 5 miles of my house in the last year including one near us that was always crowded. Although there are a few kiosks that have taken the place of the stores, their selection is limited and no one really wants to wait in line at a kiosk for very long. There is no longer any good option for physically renting movies. With the virtual disappearance in physical distribution you would expect sales in brick and mortar to decline sharply.

    There is no question that digital format will become the standard for movie consumption soon, but it seems that the lack of alternatives may be hastening the transition more so than consumer technology adoption.

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