U.S. home entertainment spending topped $20 billion in H1 2023

DEG: The Digital Entertainment Group today released its Mid-Year 2023 Digital Media Entertainment Report compiled by DEG members, tracking sources and retail input.[1]

Consumers spent $20.5 billion on movies and television shows consumed at home and on the go in the first six months of 2023. For the full first half, spending rose 14.7 percent from the $17.9 billion consumers spent in the first six months of 2022. Second quarter year-over-year growth of 14.8 percent, for a total of almost $10.4 billon, was achieved with strong theatrical franchise titles, including some spillover from late first quarter releases. Theatrical new releases are historically a key driver of home entertainment spending.

The first half 2023 growth included a 17.4 percent increase across all digitally delivered formats – comprising electronic sell-through (EST[2] ), video on demand (VOD[2] ) and subscription streaming[3] – while physical formats[4] continued to decline.

Among the trends for the Second Quarter and First Half 2023:

• The 2023 first half increase was fueled by a 20 percent increase in subscription streaming, which rose to $17.5 billion, from $14.6 billion in the first half of 2022, as targeted and general entertainment services continued to add subscribers with new content, pricing options and ad-supported tiers. Some services also raised prices. In second quarter 2023, consumer spending on subscription streaming increased 18 percent, to $8.8 billion, a slight slowdown from 22 percent growth in the first quarter.
• Consumer spending on digital purchases (EST) and rentals (VOD) also grew in the second quarter of 2023, with purchases rising 17.4 percent and rentals up 4 percent in the quarter. The effect of theatrical new releases was strong: EST purchases of theatrical titles grew 26.5 percent and theatrical rentals rose 6.4 percent.
• For the full first half, EST spending rose almost 2 percent and VOD spending fell 4 percent, reflecting a weaker first quarter in those segments. The first quarter decline and second quarter gain were driven in large part by release schedules and windowing, with several large titles releasing in the very last week of the first quarter, including Avatar: The Way of Water and Creed III.
• Premium releases continue to enjoy strong consumer interest and spending in this window is included in DEG tracking[2].
• Box-office spending on titles released to the home in the second quarter was flat compared to a year earlier, at almost $1.8 billion.
• Among the first half’s best-performing titles across transactional formats were 65 (Sony); 80 for Brady (Paramount); Ant-Man and the Wasp: Quantumania (Disney); Avatar: The Way of Water (Disney); Creed III (MGM); Dungeons & Dragons: Honor Among Thieves (Paramount); Evil Dead Rise (WBD); John Wick 4 (Lionsgate); A Man Called Otto (Sony); Puss in Boots: The Last Wish (Universal); Shazam Fury of the Gods (WBD); and The Super Mario Bros. Movie (Universal).
• Catalog sales improved in the second quarter, with sales of digital catalog increasing 1 percent for the quarter and bringing first half catalog revenue to a decline of 1 percent. Franchise drafting was a key driver of catalog trends, with Spider-Man, John Wick and Transformers titles all among the quarter’s best performers.
• Consumer spending on rentals and purchases of physical disc formats (DVD, Blu-ray and 4K UHD Blu-ray) continued to decline, falling more than 26 percent, to $392 milllion[4] in the quarter.
• Ad-supported premium AVOD and FAST content reached an estimated advertising revenue of $4.2 billion in the second quarter of 2023, according to estimates from Omdia[5] , as more major streamers diversified their offerings to include lower cost subscription plans with ads. Omdia estimates show ad revenue grew 10.5 percent in the quarter. For the full first half, ad revenue growth was 6.8 percent, reaching almost $8.2 billion.

2023 Home Entertainment Spending
U.S. Consumer Spending Thru Q2 Thru Q2 ($in millions)

                                                                                      Thru Q2     Thru Q2
                                                                                   First Half  First Half
                     Q1-2022     Q1-2023   Q1-YOY    Q2-2022     Q2-2023   Q2-YOY        2022        2023  YTD-YOY
                   ---------  ----------  -------  ---------  ----------  -------  ----------  ----------  -------
Physical Product*    $515.72     $361.45  -29.91%    $532.40     $392.44  -26.29%   $1,048.11     $753.89  -28.07%

Digital**
 EST                 $643.57     $564.35  -12.31%    $592.06     $695.07   17.40%   $1,235.63   $1,259.42    1.92%
 VOD                 $501.08     $443.47  -11.50%    $462.18     $480.54    3.97%     $963.26     $924.00   -4.08%
 SVOD***           $7,129.79   $8,708.57   22.14%  $7,474.70   $8,829.98   18.13%  $14,604.49  $17,538.55   20.09%
Total Digital      $8,274.44   $9,716.39   17.43%  $8,528.94  $10,005.58   17.31%  $16,803.38  $19,721.97   17.37%
                   ---------  ----------  -------  ---------  ----------  -------  ----------  ----------  -------
Total              $8,790.16  $10,077.83   14.65%  $9,061.33  $10,398.03   14.75%  $17,851.49  $20,475.86   14.70%
                   ---------  ----------  -------  ---------  ----------  -------  ----------  ----------  -------
Box Office ($bn)       $1.90       $2.18   14.74%      $1.77       $1.76   -0.56%       $3.67     $3.94      7.36%

* Physical Product represents consumer spending for sell-thru and rental disc transactions
** Digital transaction spending (EST and VOD) includes premium releases, but not Disney+ Premier Access titles
*** SVOD data sourced from Omdia (technology.informa.com). Disclaimer: The data is not an endorsement and reliance is at a third party’s own risk.
Disclaimer: This report contains information compiled from sources that the DEG believes have accurately reported such information, but which the DEG has not independently checked or verified. As such, the DEG does not warrant its accuracy or reliability. The report is not intended to provide investment or securities advice.

For reference, DEG provides a list of digital entertainment terms and definitions on its web site.