Pasadena, Calif., Feb. 9—Recent earnings reports from several major Hollywood studios indicate steep declines in home entertainment revenues despite growth in Blu-ray Disc sales. Recently, studio executives acknowledged that falling DVD sales may be a reflection of shifts in how people watch films, even if the economy were not in recession.

Until now, how much each factor has contributed to changes in consumer spending on home entertainment has not been clear. The results of a recent survey by C.A. Walker Research Solutions, Pasadena, Calif., among 13 to 64 year olds indicate that nearly two in five consumers report decreased home entertainment spending (38%). The impact of this decline is reduced by the 22% of consumers who report increased spending.

When looking at total respondents, a greater portion of the decline in DVD sales is attributable to the economy (59%) rather than alternate entertainment options (23%). However, among younger people 13 to 24, a greater percentage attribute their decline in spending to alternate entertainment options (41%) and less to the economy (35%).

Most consumers report at least a moderate change in how they spend their leisure time this year compared to last year.  Younger consumers report the least amount of change.

Consumers report shifting their spending to alternate entertainment options such as DVD rentals through subscription or kiosks (Netflix, Redbox), watching streaming videos online, using their cable provider’s video-on-demand service, visiting social networking sites, and watching existing DVD libraries.

The remaining 18% are attributable to “other factors,” which may include those who are holding off purchasing a Blu-ray Disc player but are not buying DVDs either. One of the respondents explained, “I am buying less [sic] DVDs as we can rent them and watch them on TV. Plus they keep changing and upgrading, that it’s no use to buy them as they will soon be obsolete.”

In total, 38% of consumers report spending less on home entertainment this year – resulting in a net shift of 16% spending less.  Older consumers 45-64 are the most likely to report a decline in spending on home entertainment.

“Looking at the data as a whole,” says Debbie Kreger, Ph.D., Group Vice President at C.A. Walker, “it would imply that the primary contributing factor is the current economic crisis. However, the role of ‘other entertainment options’ should not be overlooked. The results among 13 to 24 year olds imply that even when the economic crisis has come under control, this core demographic segment is likely to continue spending less on traditional home entertainment.”

Overall, 59% of consumers spending less on home entertainment attribute the change to economic conditions.  However, those 13-24 are most likely to attribute this change to involvement with new entertainment options.

This survey was conducted by C.A. Walker Research Solutions in cooperation with Esearch. Methodology: 1,016 people age 13 to 64 completed a survey online between February 6-8, 2009.

Since 1972, C.A. Walker has helped clients by providing expert insights into complex business issues using quantitative and qualitative market research.

Esearch has been supporting market research firms since 1995 by providing exclusive panels of respondents, and currently has nearly 800,000 panel members.

Contact:

Debbie Kreger, Ph.D.

626.584.8180 ext. 111

dkreger(at)cawalker(dot)com