Dissatisfied With Its Rate of Erosion, DVD Biz Fast-Forwards 2024 Decline

Back in February, VIP+ tolled the bell for the DVD business, predicting the once dominant home entertainment medium’s demise within the year. Now not far past the halfway mark of 2024, our hypothesis seems increasingly correct.

But even before Digital Entertainment Group released its midyear “Digital Media Entertainment Report” for 2024, things weren’t looking great for physical media. The site phased out tracking physical rental spending this year simply because the sector was too small to even bother, citing Netflix ceasing its rental business as the final nail in the coffin. With the recent news of Redbox going under, it seems DEG had the right hunch about the disc rental market’s fate.

Physical disc spending in the U.S. reached $218 million for Q2, a nearly 30% decline compared with the same period last year. Thanks to a relatively stronger Q1, physical sales generated around $451 million to date, which is still a roughly 22% decrease from the first half of 2023 (and a 52.38% drop since midyear 2021).

Speaking of last year, DEG combined sales and rentals as “Physical Product” in 2023 and didn’t disclose the exact splits. (As of 2024, Physical Product is just sales.) But with the new report and some basic math, we now know those splits for the first half of 2023, and physical sales fell below $300 million for the first time. Rentals, meanwhile, stalled in the $80 million range before Netflix even ended its mail service.

To be fair, this year’s Q2 was slower across the board due to a 10% decrease in box office spending pertaining to films released for home viewing in Q2. DEG points to Q1 2024 to exemplify theatrical releases’ key role in home entertainment spending, citing the boost from major late-2023 films including “Mission: Impossible — Dead Reckoning,” “Barbie” and “Oppenheimer” hitting the home market.

It’s worth noting that these films were also the last major releases before the Hollywood strikes stalled theatrical releases. As VIP+ anticipated in February, we’re likely still going to see the strikes’ delayed effects on home entertainment as the year goes on.

That said, catalog titles continue to be a silver lining for physical media. Collectable disc formats for older releases saw a boost in Q2, with spending on SteelBooks up 44% and 4K UHD Blu-rays up 16%. For physical media purists, these metrics are promising signs of the DVDs’ rebirth as a specialty item by way of vinyl. Still, these boosts might not be enough to convince Target or Walmart to reallocate shelf space for DVDs and Blu-rays.

But even if DVDs continue to be supported by film buffs, their impact on the home entertainment world is astoundingly miniscule. Physical product’s $218 million accounted for less than 2% of the total $12.8 billion generated in Q2.

For comparison, streaming subscriptions generated $11.6 billion in the same period — over 90% of total spending — keeping up the decade-plus trend of streaming single-handedly propping up the American home entertainment market.