Consumers are spending more and more time consuming entertainment — Americans spend an average of four hours EACH DAY watching video.
But how they're spending their entertainment dollars is shifting.
The choices are nearly infinite, so now it's all about value and convenience.
Instead of buying physical objects — DVDs, books and magazines — they're spending on access — cable and internet — and for experiences like an immersive movie or a huge concert performance.
Big budgets and 3-D technology make the trip to the movie theater worth it.
The box office grew 10 percent last year, with Americans buying 5.3 percent more tickets. Higher prices for 3-D tickets were one reason for the top line growth: by some measures an average 3-D ticket costs $3 more than regular 2-D. But people are willing to pay the difference for the higher production value of 3-D films like Avatar.
"Avatar" has the biggest box office of any film - $2.6 billion worldwide - but it would have been even bigger if there were more 3-D theaters to meet demand. Just 50 percent of Avatar's runs were on 3-D screens, but those showings generated 80 percent of the film's domestic business, and that's not just because 3-D tickets are pricier. That's why Fox(NWS) is considering re-releasing "Avatar" in 3-D this summer with some additional footage to take advantage of more space in 3-D theaters.
When it comes to home entertainment consumers are less interested in building a library on their shelves. Now it's all about access to lots of choices, and not having to make a decision about what you're watching until the very last minute. Forrester reports that the average American household spends $98 monthly on content, and 77 percent of that goes towards general access, i.e. cable or internet subscriptions.
Meanwhile DVD sales fell 13 percent in the US last year to $8.73 billion according to Adams Media Research, while global revenues fell 10 percent. The digital business is much smaller but it's growing fast, particularly internationally. Worldwide video on demand revenues (including the sale of digital copies) grew 18 percent last year and are expected to grow another 19 percent this year to $2.5 billon worldwide. Here in the US, digital revenues are expected to grow 5 percent. (All these stats from Adams Media Research and Screen Digest).
DVDs aren't the only type of packaged media to suffer. Just yesterday NPD reported that video game sales in the U.S. dropped a whopping 15 percent in February. With so many inexpensive ad-ons to games consumers already own, and free online games, it's hard to justify driving to a store to shell out $50 for a new disc.
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