Digital Movie Sales Rise in Victory for Apple and Amazon

According to the Digital Entertainment Group (DEG):

Stability in home entertainment continued for the second straight year in 2013 as total consumer spending rose nearly one percent to $18.2 billion. Results were boosted by the growing awareness and acceptance of digital services and products offered by both online and brick and mortar retailers. Electronic sell through (EST) now branded as DIGITAL HD jumped 50 percent for the year, surpassing $1 billion for the first time, while video on demand (VOD) spending rose five percent in 2013 from a year earlier. New platforms such as Comcast’s digital movie sell through service and Target Ticket, and media hub consoles like Microsoft’s Xbox One and Sony’s PlayStation 4 contributed to growth by expanding consumer access to entertainment.

Ironically, one of the reasons online electronics sales have so much potential is because they remain a small part of the industry. They are less than 10% of the industry total, and one-sixth of all digital downloads.

However, the primary reason that the improvement will continue is the two companies that have championed it. Apple’s leverage for the sale of entertainment content remains extraordinary because of iTunes, which has revolutionized the music industry and the millions of portable electronics devices it has in the marketplace — particularly iPhones and iPads. And this number, based on current trends, will only continue to explode by the tens of millions per year. Amazon, on the other hand, has the advantages of the Kindle’s distribution and the Amazon Prime program, which offers video content as the part of a larger service that includes special delivery prices for goods bought at the world’s largest e-commerce site. The bundle costs the consumer only $79 a year, putting it within the reach of a large number of people who want new entertainment options.

With champions that include the two most powerful tech companies in the world, the “electronic sell through” end of the video market should become its largest one within a few years.