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Movie Consumption at Home - US - May 2011

Definition

This report discusses consumer attitudes and behavior when watching movies at home, on the TV or PC (but not mobile phones or tablets). The scope includes most content sources, including pay TV, physical discs, and internet-based streaming and downloads. While TV show content is discussed along with movies in many contexts, it is not the focus of this report. The analysis does not include behavior of teens or children. The report builds on Mintel’s Recorded Entertainment—U.S., February 2009.

Abbreviations

The following abbreviations are used in this report.

  • 3D – Three Dimensional
  • AV – Audio/Video
  • BD – Blu-ray Disk
  • CD – Compact Disk
  • DEG – Digital Entertainment Group
  • DVD – Digital Versatile Disk
  • DVR – Digital Video Recorder
  • FCC – Federal Communications Commission
  • HBO – Home Box Office
  • HD – High Definition
  • HDTV – High Definition Television
  • HH – Household
  • Mbps – Megabits per second
  • NCS – National Consumer Survey (Experian Simmons)
  • NHCS – National Hispanic Consumer Survey (Experian Simmons)
  • PC – Personal Computer
  • PPV – Pay-per-view
  • VOD – Video on Demand

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Sales data
          • Consumer survey data
            • Advertising
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Consumer flight to value rentals puts pressure on revenues
                      • Digital slowly replacing physical discs
                        • Home video sees competition from box office and video games
                          • Studios struggle to deal with disruptive rental models
                            • Kiosks and subscription models drive change in the industry
                              • Hardware ownership and content subscriptions carry room for growth
                                • Broadcast and cable TV remain most popular source of movies
                                  • At-home viewing preferences support Netflix streaming model
                                    • Digital rentals face highly elastic demand
                                      • Internet-based rentals are the most preferred method of disc rental
                                        • Netflix streaming particularly attractive to 18-24s and respondents with children
                                          • PC viewing supplements TV viewing in multiple ways
                                          • Insights and Opportunities

                                            • New release windows create value but older content can be better exploited
                                              • AV superiority not effectively marketed by advanced services
                                                • Netflix streaming currently supplements but will eventually disrupt
                                                • Inspire Insights

                                                    • Inspire Trend—Guiding Choice
                                                    • Competitive Context

                                                      • Movie theaters increase bang for the buck
                                                        • Figure 1: U.S. box office revenues and admissions, 2005-10
                                                      • Cinematic video games reduce time spent watching TV
                                                          • Figure 2: North American packaged video game sales, 2005-10
                                                      • Market Size and Forecast

                                                        • Recession and disruptive business models make for dim outlook
                                                          • Figure 3: U.S. sales of movie sell-through and rental, at current prices, 2005-15
                                                          • Figure 4: U.S. sales of movie sell-through and rental, at inflation-adjusted prices, 2005-15
                                                        • Fan-chart forecast
                                                            • Figure 5: Fan-chart forecast at 50-95% confidence levels, 2005-15
                                                        • Market Drivers

                                                          • Disruptive business models offer consumers more for less
                                                            • Figure 6: Growth in home video spending and number of transactions, 2009-10
                                                          • Streaming library
                                                            • Kiosk rentals
                                                              • Shift from buying to renting means fewer new releases
                                                                  • Figure 7: Studio receipts from home video transactions, by transaction type, 2010
                                                                • Negotiated delay creates window for higher-priced rentals
                                                                  • Hardware and broadband penetration aids digital distribution
                                                                    • Digital transmission a more likely substitute for discs
                                                                    • Segment Performance

                                                                      • Digital grows explosively but physical discs still dominant
                                                                        • Sales by segment
                                                                          • Figure 8: U.S. sales of movie sell-through and rental, discs vs. digital transmission, 2008 and 2010
                                                                          • Figure 9: U.S. sales of movie sell-through and rental, discs vs. digital transmission, 2005-15
                                                                      • Segment Performance—Physical Discs

                                                                        • Physical disc revenues decline at an accelerating pace
                                                                          • Figure 10: U.S. sales of physical disc sell-through and rental, at current prices, 2005-15
                                                                        • Disc rental: Kiosks surpass stores in volume share
                                                                          • Figure 11: Share of U.S. physical disc rental turns, by distribution channel, 2009 and 2010
                                                                        • Blu-ray poised to grow as hardware penetration increases
                                                                          • Figure 12: U.S. sales of physical disc sell-through and rental, by type of disc, 2006-10
                                                                      • Segment Performance—Digital Transmission

                                                                        • Growth of digital sell-through and VOD slows in 2011
                                                                          • Figure 13: U.S. sales of digital movie sell-through and rental, at current prices, 2005-15
                                                                      • Leading Companies

                                                                        • Traditional channels
                                                                          • Video stores: Blockbuster assets purchased in bankruptcy
                                                                            • Pay TV: Providers emphasize streaming content and ways to watch
                                                                              • Premium cable channels
                                                                                • New entrants
                                                                                  • Streaming libraries: Netflix shifts focus from rental-by-mail to streaming
                                                                                    • Streaming library
                                                                                      • Content licensing
                                                                                        • Streaming model competition
                                                                                          • Kiosks: Redbox expands rapidly and increases offerings
                                                                                            • 28-day window
                                                                                              • Digital rentals: Branded retailers scramble for presence in emerging space
                                                                                                • Amazon on Demand
                                                                                                  • Apple TV
                                                                                                    • Vudu (Walmart)
                                                                                                      • Sonic Solutions (Rovi)
                                                                                                      • Innovations and Innovators

                                                                                                        • DirecTV premium VOD shortens home video window
                                                                                                          • Digital streaming channels continue to grow
                                                                                                            • Facebook
                                                                                                              • Independent film (Mubi, Fandor)
                                                                                                                • AnyClip
                                                                                                                  • Industry collaborates on cloud-based retailing
                                                                                                                  • Marketing Strategies

                                                                                                                    • Television advertising
                                                                                                                      • Figure 14: Adspend of home movie rental brands, 2008-09
                                                                                                                    • Netflix aims for the value consumer
                                                                                                                      • Figure 15: Netflix—Western before bedtime, television ad, March 2011
                                                                                                                    • Blockbuster touts lower prices and less waiting
                                                                                                                      • Figure 16: Blockbuster Online—25th anniversary, television ad, December 2010
                                                                                                                    • Pay TV companies target more upscale sensibilities
                                                                                                                      • DirecTV
                                                                                                                        • Figure 17: DirecTV—Movie thief, television ad, October 2010
                                                                                                                      • Comcast Xfinity
                                                                                                                        • Figure 18: Comcast Xfinity—Online library, television ad, February 2011
                                                                                                                      • Online advertising
                                                                                                                        • Redbox invests in building Facebook fan base
                                                                                                                          • Netflix invests heavily in online display ads
                                                                                                                          • Ownership and Subscription

                                                                                                                            • Penetration of advanced hardware significant but room left to grow
                                                                                                                              • Figure 19: Ownership of and subscription to home movie viewing products, January 2011
                                                                                                                            • Netflix falls behind Blu-ray and premium cable among highest earners
                                                                                                                              • Figure 20: Ownership of and subscription to home movie viewing products, by household income, January 2011
                                                                                                                            • Netflix more popular than premium cable among under-45s
                                                                                                                              • Figure 21: Subscription to movie content sources, by age, January 2011
                                                                                                                            • Respondents with children invest more in home movie viewing
                                                                                                                              • Figure 22: Ownership of and subscription to home movie viewing products, by children in the household, January 2011
                                                                                                                            • Netflix subscribers more likely to subscribe to premium cable channels
                                                                                                                              • Figure 23: Ownership of and subscription to home movie viewing products, by Netflix subscribership, January 2011
                                                                                                                          • Levels of Consumption

                                                                                                                            • Broadcast and cable TV remain most popular source of movies
                                                                                                                              • A third of respondents watch movies on the PC
                                                                                                                                • Figure 24: Sources of movie content, by viewing platform, January 2011
                                                                                                                              • Flat-fee concepts see more frequent usage
                                                                                                                                • Figure 25: Sources of movie content, by viewing platform, January 2011
                                                                                                                              • Men, under-45s, and respondents with children rent more DVDs
                                                                                                                                • Figure 26: Number of physical discs rented and purchased, by various demographic factors, Oct 2009-Jun 2010
                                                                                                                            • Attitudes toward Home Movie Viewing

                                                                                                                              • Only a quarter of home movie viewers say HD is important
                                                                                                                                • By gender
                                                                                                                                  • Figure 27: Attitudes toward audio and video quality, by gender, January 2011
                                                                                                                                • By household income
                                                                                                                                  • Figure 28: Attitudes toward audio and video quality, by household income, January 2011
                                                                                                                                • Viewing habits point to value of streaming libraries
                                                                                                                                  • Figure 29: Home movie viewing habits, by age, January 2011
                                                                                                                                • Tracking of release dates limited to a minority of respondents
                                                                                                                                  • Figure 30: Additional home movie viewing habits, by age, January 2011
                                                                                                                                • Family households more likely to collect discs, watch together
                                                                                                                                  • Figure 31: Disc collection and viewing with children, by children in the household, January 2011
                                                                                                                              • Digital Rental Pricing

                                                                                                                                • Highly elastic demand means two dollars makes a big difference
                                                                                                                                  • By age
                                                                                                                                    • Figure 32: Willingness to pay for digital rentals, by age, January 2011
                                                                                                                                  • By household income
                                                                                                                                    • Figure 33: Willingness to pay for digital rentals, by household income, January 2011
                                                                                                                                  • By children in the household
                                                                                                                                    • Figure 34: Willingness to pay for digital rentals, by children in the household, January 2011
                                                                                                                                  • Appreciators of HD and audio encoding far more willing to pay
                                                                                                                                    • Figure 35: Willingness to pay for digital rentals, by attitudes toward AV quality, January 2011
                                                                                                                                • Attitudes toward Physical Discs

                                                                                                                                  • Internet rental leads but local video stores still competitive among 18-24s
                                                                                                                                    • Figure 36: Preference for physical disc distribution channels, by age, January 2011
                                                                                                                                  • Local video stores and kiosks fueled by last-minute and multiple rentals
                                                                                                                                    • Figure 37: Attitudes toward physical discs, by preferred distribution channel, January 2011
                                                                                                                                  • 18-24s seek immediate fulfillment and are more willing to pay
                                                                                                                                    • Figure 38: Attitudes toward physical discs, by age, January 2011
                                                                                                                                  • Rentals provide greater value for family demographic
                                                                                                                                    • Figure 39: Attitudes toward physical discs and distribution channels, by children in the household, January 2011
                                                                                                                                • Attitudes toward Netflix

                                                                                                                                  • Netflix streaming carries strong momentum despite obstacles
                                                                                                                                      • Figure 40: Attitudes toward Netflix, January 2011
                                                                                                                                    • Netflix streaming especially attractive to 18-24s
                                                                                                                                      • Figure 41: Attitudes toward Netflix, by age, January 2011
                                                                                                                                    • High-income HHs less likely to watch streams
                                                                                                                                      • Figure 42: Attitudes toward Netflix, by household income, January 2011
                                                                                                                                    • Family demographic finds more value in streaming library
                                                                                                                                      • Figure 43: Attitudes toward Netflix, by children in the household, January 2011
                                                                                                                                  • Viewing on the PC

                                                                                                                                    • PC movie viewing reported by large minority with varying motivations
                                                                                                                                        • Figure 44: Movie viewing on the PC, January 2011
                                                                                                                                      • By age
                                                                                                                                        • Figure 45: Movie viewing on the PC, by age, January 2011
                                                                                                                                      • By household size
                                                                                                                                        • Figure 46: Movie viewing on the PC, by household size, January 2011
                                                                                                                                    • Impact of Race and Hispanic Origin

                                                                                                                                      • Black respondents more likely to find value in disc rentals
                                                                                                                                        • Figure 47: Attitudes toward physical discs and distribution channels, by race and Hispanic origin, January 2011
                                                                                                                                      • Blacks and Hispanics more avid users of Netflix streaming
                                                                                                                                        • Figure 48: Attitudes toward Netflix, by race and Hispanic origin, January 2011
                                                                                                                                    • Cluster Analysis

                                                                                                                                        • Cluster 1: Indifferents
                                                                                                                                          • Characteristics
                                                                                                                                            • Opportunity
                                                                                                                                              • Cluster 2: Netflix nuts
                                                                                                                                                • Characteristics
                                                                                                                                                  • Opportunity
                                                                                                                                                    • Cluster 3: Videophiles
                                                                                                                                                      • Characteristics
                                                                                                                                                        • Opportunity
                                                                                                                                                          • Characteristic tables
                                                                                                                                                            • Figure 49: Movie consumption at home clusters, January 2011
                                                                                                                                                            • Figure 50: Ownership of and subscription to home movie viewing products, by cluster, January 2011
                                                                                                                                                            • Figure 51: Willingness to pay for digital rental streams, by cluster, February 2011
                                                                                                                                                            • Figure 52: Attitudes toward AV quality and home movie viewing habits, by cluster, January 2011
                                                                                                                                                            • Figure 53: Attitudes toward physical discs and distribution channels, by cluster, January 2011
                                                                                                                                                          • Demographic tables
                                                                                                                                                            • Figure 54: Movie consumption at home clusters, by gender, January 2011
                                                                                                                                                            • Figure 55: Movie consumption at home clusters, by age, January 2011
                                                                                                                                                            • Figure 56: Movie consumption at home clusters, by household income, January 2011
                                                                                                                                                            • Figure 57: Movie consumption at home clusters, by race and Hispanic origin, January 2011
                                                                                                                                                          • Cluster methodology
                                                                                                                                                          • Custom Consumer Groups

                                                                                                                                                            • Singles less likely to invest in home viewing technology
                                                                                                                                                              • Figure 58: Ownership of and subscription to home movie viewing products, by marital status and presence of children, January 2011
                                                                                                                                                            • Singles less concerned with AV quality
                                                                                                                                                                • Figure 59: Attitudes toward AV quality and home movie viewing habits, by marital status and presence of children, January 2011
                                                                                                                                                              • Men younger than 35 most important for high-priced digital rentals
                                                                                                                                                                • Figure 60: Willingness to pay for digital rental streams, by age and gender, January 2011
                                                                                                                                                            • Appendix—Other Useful Consumer Tables

                                                                                                                                                              • By age
                                                                                                                                                                • Figure 61: Ownership of and subscription to home movie viewing products, by age, January 2011
                                                                                                                                                                • Figure 62: Attitudes toward audio and video quality, by age, January 2011
                                                                                                                                                              • By gender
                                                                                                                                                                • Figure 63: Movie viewing on the PC, by gender, January 2011
                                                                                                                                                            • Appendix—Trade Associations

                                                                                                                                                              Companies Covered

                                                                                                                                                              • Amazon North America
                                                                                                                                                              • American Electronics Association
                                                                                                                                                              • Apple, Inc
                                                                                                                                                              • AT&T Inc.
                                                                                                                                                              • Best Buy stores (USA)
                                                                                                                                                              • Blockbuster USA
                                                                                                                                                              • Comcast Corporation
                                                                                                                                                              • Consumer Electronics Association
                                                                                                                                                              • CVS Caremark Corporation
                                                                                                                                                              • DEG: The Digital Entertainment Group
                                                                                                                                                              • Economist Group Limited (The)
                                                                                                                                                              • Electronic Industries Alliance
                                                                                                                                                              • Facebook, Inc.
                                                                                                                                                              • Federal Communications Commission (FCC)
                                                                                                                                                              • Fox Filmed Entertainment
                                                                                                                                                              • Google, Inc.
                                                                                                                                                              • Home Box Office, Inc.
                                                                                                                                                              • IMAX Corporation
                                                                                                                                                              • Industrial Telecommunications Association (ITA)
                                                                                                                                                              • Intuit Inc.
                                                                                                                                                              • LG Electronics Inc (USA)
                                                                                                                                                              • Microsoft USA
                                                                                                                                                              • Motion Picture Association of America
                                                                                                                                                              • Napster Inc.
                                                                                                                                                              • National Association of Theater Owners (NATO)
                                                                                                                                                              • National Cable Television Association (NCTA)
                                                                                                                                                              • Netflix, Inc.
                                                                                                                                                              • New Line Cinema Corporation
                                                                                                                                                              • Nintendo of America Inc.
                                                                                                                                                              • Redbox Automated Retail, LLC
                                                                                                                                                              • Samsung Electronics (USA)
                                                                                                                                                              • Satellite Broadcasting Communications Association
                                                                                                                                                              • Scottrade Inc.
                                                                                                                                                              • Sears Holdings Corporation
                                                                                                                                                              • Sonic Corp.
                                                                                                                                                              • Sony Corporation of America
                                                                                                                                                              • Starz Entertainment Group LLC
                                                                                                                                                              • Target Corporation
                                                                                                                                                              • The DIRECTV Group Inc.
                                                                                                                                                              • The National Cable and Telecommunications Association
                                                                                                                                                              • Time Warner Inc.
                                                                                                                                                              • Twentieth Century Fox Home Entertainment Inc.
                                                                                                                                                              • Twitter, Inc.
                                                                                                                                                              • U.S. Bureau of the Census
                                                                                                                                                              • Universal Pictures
                                                                                                                                                              • US Department of Commerce
                                                                                                                                                              • Verizon Communications Inc.
                                                                                                                                                              • Viacom Inc.
                                                                                                                                                              • Walmart Stores (USA)
                                                                                                                                                              • Walt Disney Company, The
                                                                                                                                                              • Warner Bros. Entertainment Inc.
                                                                                                                                                              • YouTube, Inc.

                                                                                                                                                              Movie Consumption at Home - US - May 2011

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