The transition from legacy broadcast and cable television to a streaming-dominated future has been particularly stark the past few days. First, Warner Bros. Discovery and Paramount Global wrote down the value of their long-lucrative cable operations by a total of $15 billion during last week’s earnings calls.
And now trade organization the Digital Entertainment Group reports that home entertainment spending topped $25.4 billion in the first half of 2024, up by nearly $5 billion, or 22 percent, from the same period in 2023.
Most of that growth came from streaming video, where half-year 2024 revenues jumped 27.1 percent to nearly $22.9 billion, up from $18 billion in the same period last year. Even subscription streaming, which has been challenged by higher churn and an increasingly saturated U.S. market, saw revenues jump more than 27 percent to $11.5 billion, DEG said in its release.
The non-subscription side of streaming (ad-supported premium AVOD and Free, Ad-Supported TV) also grew to $5.4 billion in the second quarter, DEG said, citing statistics from Omdia.
Omdia estimated ad revenue for the sector was up a whopping 51 percent in the second quarter (Q1 grew 50 percent), a good sign for all the subscription services (other than Apple TV+) that have begun offering a cheaper, ad-supported basic tier as a way to reduce churn among bargain hunters. The Omdia numbers don’t include subscription revenues, just ad revenues, for the hybrid services such as Hulu.
Advertisers and media buyers are getting increasingly comfortable putting their brands around streaming services, as the new numbers suggest. Early last week, Comcast’s NBCUniversal division reported that ad revenues for the Paris Olympics and Paralympics had already exceeded totals from the previous two summer games combined. And 70 percent of advertisers were first timers.
The ad-supported market segment has been supercharged since February, when Amazon converted its 200 million or so Prime Video subscribers onto an ad-supported tier. Those Prime customers who still want to avoid ads must pay an additional $3 per month, though outside analysts project that’s a relatively tiny percentage of viewers.
More traditional home-entertainment distribution channels such as electronic sell-through and digital rentals didn’t fare as well as streaming, perhaps also a sign of the shifting consumer habits made possible by the streaming services’ bottomless wells of inexpensive viewing options.
Consumer spending on electronic sell-through was down 11 percent, while digital rentals (video on demand) were basically flat, down less than 1 percent, DEG said.
No doubt contributing to the poor transactional results were the goods being sold. Theatrical releases in the first half of the year featured few big box office hits, which typically influences sell-through and rentals too.
“The 2024 first half suffered from tough comparisons with 2023, when Universal’s $575 million box-office hit The Super Mario Bros. Movie was released in home entertainment windows,” according to DEG, which represents home-entertainment divisions of media companies as well as related tech and services companies.
“The first quarter benefitted, however, from a number of strong holdover titles from late 2023, including Barbie (WBD); Guardians of the Galaxy Vol. 3 (Disney); John Wick Chapter 4 (Lionsgate); Mission: Impossible – Dead Reckoning Part 1 (Paramount); and Oppenheimer (Universal),” DEG wrote. As the holdovers’ momentum dissipated, relatively few theatrical releases beyond Warner’s Dune: Part Two fared well enough to lift the sector from the dumps.
People are still buying some DVDs, Blu-Ray and Ultra HD Blu-Ray discs, mostly in high-end “SteelBook” and UHD versions of particularly treasured and collectible titles, DEG said.
The high-end versions saw double-digit growth even as the overall category of physical disc sales continued what DEG called “a steady decline,” down 28.5 percent in Q2, and 22. 2 percent overall.
