Online Streaming the Answer to Declining DVD, Blu-ray Sales?

According to a new report from U.K.-based Generator Research, online movie streaming can be as profitable as television downloads and disc sales. The report estimates that film producers are projected to earn $29.4 billion from television and home video sales in 2014. However, the report also recommends a shift in distribution strategies for home entertainment, as revenue from DVD and Blu-ray sales are expected to decline by 38 percent over the next four years.

“If movie producers charged a $15 monthly fee to just 45 percent of the world’s online subscribers, they could rake in just as much cash as they currently do through TV downloads and disc sales,” reports Computerworld.

“Movie producers have little to fear from online distribution in the long term,” suggests the report. “It is the distribution part of the movie business that should be worried because online distribution will replace a sizable portion of their current industry… For those operating in developed Internet markets, this will mean that corporate strategies must change.”

The report focuses on the emergence of online movie services such as Netflix and iTunes, consumer expectations regarding entertainment on connected mobile devices, and the migration away from physical formats towards an array of online alternatives. It also examines a range of payment models including electronic sell through, download to own, online rental, online subscription services, and subscription VOD.

Key takeaways include:

  • Online movie revenue is expected to increase by 260 percent from $3.5 billion this year to $12.7 billion in 2018.
  • Forty-five percent of the world’s broadband subscribers equates to 348 million people.
  • Revenue from television downloads and rentals are also expected to increase from $11.7 billion in 2014 to $14.3 billion in 2018.
  • Box office revenues are also expected to increase over the next four years by 22 percent, from $33.2 billion in this year to $40.5 billion in 2018.