Are Consumers Over Buying DVDs?

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Via Netflix

A new entertainment industry report focuses on how consumers spent more on Blu-ray discs and players during the first half of 2011. But it can’t hide that overall DVD purchases were down 18.3%, at the same time that spending was up 40% to 45% on subscription services such as Netflix and kiosk DVD rentals like Redbox. The Digital Entertainment Group’s mid-year report tries to play up the good news for the industry:

We are encouraged to see stabilization as we move into the second half of the year. Blu-ray Disc spending is up more than 10 percent and overall consumer spending on home entertainment is down five percent, despite a 16 percent drop in box-office for titles that entered the home entertainment window in the first half of 2011.

Down in the report’s tables, however, it’s revealed that consumer spending on “Sell-Thru Packaged Goods” (DVDs) had dropped 18.3% in the first six months of 2011, compared to the first half of 2010.

(MORE: Fewer People Are Going to the Movies, and Why Movie Studios and Theaters Don’t Care)

The report’s authors underplay the falloff in sales, saying that the enormous success of “Avatar,” which sold more than 12 million discs in the second quarter of 2010 alone, makes comparisons between the years unfair. What’s more, the industry is looking forward to strong sales for the rest of 2011:

With the enormous slate of theatrical blockbusters coming to home entertainment in the third and fourth quarters, including Transformers: Dark of the Moon, Harry Potter and the Deathly Hallows: Part 2, The Hangover Part II, Pirates of the Caribbean: On Stranger Tides, and Fast Five, the industry is extremely optimistic about the second half of the year.

But should anyone in the business of selling DVDs be “extremely optimistic”? For all of Avatar’s success, 2010 wasn’t a particular good year for DVD sales; 2010 actually marked the third year in a row of declining sales.

There are many explanations why consumers are buying fewer DVDs. Certainly, the economy plays a role. Everyone’s looking to get more for their money, and for the price of one new DVD, you could rent 15 or more movies from kiosk rental vendor Redbox or pay for a month or two’s membership with Netflix. While DVD sales languish, both of these businesses are thriving: Spending on subscription services (like Netflix) was up 45.7% in the first half of 2011, while kiosk rental spending rose 39.8%.

There’s also what you might call the “stuffed shelf syndrome”: The living rooms of American homes are already filled with rows of mediocre DVDs purchased over the last decade that were watched once and now just take up shelf space. Usually, they’re ignored, but perhaps they also sometimes serve as reminders that even if you like actor Paul Rudd, you don’t need to own every movie he’s ever been in.

Why add to your already stuffed collection of so-so films, especially when there are plenty to pick from at Redbox or Netflix?

(MORE: Netflix Customers Outraged As Member Plans Get 60% More Expensive)

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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