For the first time in the US, streaming revenue outpaced disc sales in 2016, according to trade organization Digital Entertainment Group. UHD Blu-ray stemmed the losses somewhat but disc sales are on the decline.
Streaming is now a bigger business
The total market for home entertainment in the US has been on the decline for over a decade as Hollywood continues to refuse to adjust its window business model that mandates that movies travel from cinema to disc to subscription. The music industry faced the same challenge - and years of declining sales - before it finally embraced streaming, which helped the music industry return to growth.
For the first time ever, streaming revenue eclipsed disc sales in 2016. For the full year, consumers in the US spent $10.3 billion on streaming ($6.2b on subscription streaming + $4.1b on electronic sales and rentals). Streaming revenue was up 15% over 2015. Subscription services like Netflix grew the most. Pay-per-view services like iTunes also grew but not as fast as in recent years.
2016: Streaming: $10.3b DVD/Blu-ray: $8.0b
Sales of DVD and Blu-ray on the other hand were down almost 9.5% (over 2015) to $5.5b and physical rentals were down 17.8% (over 2015) to $2.5b. Total disc revenue in the US in 2016 was $8b.
So $10.3b for streaming versus $8.0b for discs in 2016, according to DEG. And that is not even the full story because Amazon Prime Video revenues are not included in the figures.
2016 represents a tipping point, especially when you consider that Hollywood introduced UHD Blu-ray. The format has helped stem the losses for disc sales but has done little to reverse the negative trend.