Bleak outlook for DVD, Blu-ray rental business

05 May, 2014 by Don Groves

The rental of DVDs and Blu-rays will continue to fall sharply over the next five years as consumers migrate to online platforms and pay-TV, a new report predicts.

The industry’s revenues are projected to decline by nearly 14% to $597.4 million this year, generating $31.1 million in profit, according to IBISWorld’s Video and DVD hire outlets report.

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The research film estimates the number of retail outlets has halved to about 1,000 businesses employing 3,650 people as revenues contracted by an annual average of nearly 16% in the past five years.

“The scale of the industry’s decline since the late 2000s has been startling,” the report says. “The major players are steadily reducing their network of bricks-and-mortar stores, largely as franchisees go out of business. The major players are diversifying into the delivery of movies through alternative methods, notably DVD kiosks and online streaming.”

IBISWorld’s study follows the Australian Home Entertainment Distributors Association report which showed disc sales and rentals fell by 7% to $801.3 million in 2013. AHEDA tracked a 22.4% jump in digital film and TV consumer revenues to $143.6 million last year.

IBISWorld foresees disc revenues tumbling by 21% per year to $180.4 million in 2018-2019, with employment falling to about 350 people in 100 establishments. The bulk of sales will be generated by as many as 5,000 DVD and Blu-ray rental kiosks, it says.

At present Video Ezy is reckoned to be the biggest player with a market share of 46%, followed by Network Group with 13.4%, Leading Edge Group at 12.6% and Civic Entertainment 10.1%.

“Cheaper avenues for providing movie rental, including online streaming and DVD vending kiosks, and reduced prices for DVDs at retail outlets have contributed to greater competition,” it says.

“The rise of broadband internet has also increased substitution for the delivery of movies through digital technology. The faster internet speeds have led to more illegal downloads and increased use of legal online streaming and rental services such as Apple’s iTunes, YouTube and Microsoft’s Zune network.”

 

 

 

 

 

 

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