Home entertainment spending rises 5%

Spending on home entertainment totaled $3.9 billion in the third quarter, up 5% from a year earlier, marking the first increase since the recession took hold in 2008.

Purchases of recorded movies fell to $1.7 billion in the latest period, down 4% from the third quarter of 2010, a new report from Digital Entertainment Group shows.

The continued drop in consumer purchases of movies came despite the growth in popularity of Blu-ray discs. Sales of Blu-ray discs, an increasingly popular format, were up 58%, but that wasn’t enough to offset a decline in DVD sales.

The video rental market also was soft, staying relatively flat at $1.8 billion. The closing of hundreds of Blockbuster Inc. outlets helped push rental revenue from physical stores down 29%. The loss of Blockbuster stores was partially offset by gains in rentals at Redbox kiosks.

Digital revenue, increasingly important for the home entertainment business, showed double-digit percentage gains. Spending on online rentals and purchases jumped 56% to $811 million as subscription streaming services such as those offered by Netflix Inc. and Amazon.com Inc. gained popularity. The increase also reflects a decision by Netflix to report its revenue from streaming separately from its movies-by-mail revenue.

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