Marking a major milestone in home entertainment’s shift to digital formats, video streaming subscription revenues surpassed DVD / Blu-ray sales in the United States for the first time in 2016. While U.S. consumers spent $6.23 billion on subscriptions to services such as Netflix (up 23% from 2015), DVD and Blu-ray sales dropped 9.5 percent to $5.49 billion, according to the Digital Entertainment Group's year-end report.
Looking at the home entertainment market as a whole, it is clear that the future of video distribution is digital. While consumer spending on streaming subscriptions, video on demand and electronic sell-through increased in 2016, all physical formats, both sell-through and rental, suffered double-digit declines. Digital business models now account for 56% of home entertainment spending and could soon surpass box office earnings to become the largest source of income for the entertainment industry.
As more Americans find the price of their bundling packages too expensive to bear, there also lies a race between content providers in the background to grab their share of the streaming video market.
Last month HBO announced they too will launch its streaming service in 2015.
Adding to the mix, online retailer Amazon.com Inc will release a new ad-supported video streaming service early next year, the New York Post reported, citing sources. The new service will compete directly with Hulu and Netflix Inc, whose charges begin at $7.99 a month for customers in the United States.
HBO CEO Richard Plepler, provides insight to the company's evolving business model, and partnership with distributors.
"I don’t think it competes at all," Plepler said. "The most important thing to remember about our Amazon decision is its three-year-old window library and what we basically decided is somewhere in the neighborhood of 65 or 70 percent of Amazon Prime subscribers do not get HBO. So we thought this
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