Subscription video on demand services are enjoying a steady rise, with consumer spending growing 23 percent year-over-year in the third quarter of 2015 to $1.27 billion, a new report by The Digital Entertainment Group said.
The jump helped contribute to total U.S. digital spending for the quarter of $2.12 billion, a figure that includes electronic sell-through (EST), video on demand (VOD) and subscription-based streaming like Netflix (NASDAQ: NFLX) and Amazon Prime Instant Video (NASDAQ: AMZN).
What's interesting is that while U.S. consumers are spending roughly the same amount for home entertainment in 2015 as they did in 2014, they're spending their money in different ways.
To illustrate: Spending in third-quarter 2015 was $3.97 billion, compared to $3.96 billion a year previously -- just a 0.22 percent rise -- and total spending for the year to date is $12.73 billion compared to $12.68 billion a year previous. However, amid those figures, DVD and Blu-Ray purchases declined 14.01 percent year-over-year, while sales of digital movies (digital EST) jumped 14 percent. Physical media rentals, both through brick-and-mortar stores and media-by-mail subscriptions, all showed declines year over year as SVOD grew.
The numbers reinforce the idea that U.S. households are holding the line on spending, but are shifting their budgets toward online streaming and digital EST purchases.
"It now looks certain that, when DEG reports 2015 totals early in 2016, SVOD spending will exceed rental spending for the first time. However, the truth is that it likely has exceeded it for quite some time," said Colin Dixon of nScreenMedia. That's because DEG does not include Amazon Prime subscriber numbers in its totals, he said. "The good news for the entertainment industry is the overall home entertainment spending remains steady."
SVOD to outpace DVD sales in 2015, analyst says
Comcast video services chief Strauss: Millennials are among our biggest bundle buyers
VOD revenue drops to $1.97B in 2014, reversing positive growth trend