Streaming subscriptions leads to rise in home entertainment spending

Consumers are increasingly looking to stay at home for their entertainment endeavors and, with a wealth of options available to them, it’s easy to see why. According to The New York Times, consumer spending on movies and television in-home entertainment formats increased to approximately $3.94 billion in the third quarter of 2012. This was up slightly from the $3.93 billion amassed by the same formats during this period a year earlier, according to data from the Digital Entertainment Group. For the year to date, consumer spending in the industry had totaled $12.34 billion, representing a 1 percent uptick from the $12.22 billion accrued over the same time period in 2011.

One big reason for this – and a tremendous source of recurring revenue for the studios and companies behind this service – is the rise of subscription streaming. According to the news source, subscription streaming of movies and television programming increased dramatically to $579 million in the third quarter. This was up from $255 million in the same time period a year ago. The significant increase can be attributed to the continued growth and proliferation of video-on-demand services and the electronic sale of digital programming.

The growth in the market was not exclusive to the United States alone. According to ABI Research, the worldwide pay-TV market – inclusive of cable, satellite and internet protocol television (IPTV) – is expected to reach $236 billion by the end of the year. This was a fairly substantial increase from the $223 billion earned in 2011.

“Growth in satellite and IPTV services in North America comes at the expense of cable,” Jake Saunders, Vice President and practice director of core forecasting, said in a statement. “This competitive shift, coupled with a small drop in pay-TV penetration, lead cable-TV revenues to fall about 1 percent in 2012 despite a small increase in [average revenue per user (ARPU)].”

The development of these new sources of recurring revenue for movie and television studios and distributors have helped offset the continuously slumping declines in DVD sales and rentals. The relatively new streaming services grant users the convenience of browsing and being entertained right from the comfort of their own couches.

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The Forrester Wave: Subscription Billing Platforms, Q4 2015

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