Strong Box Office Leads to Increase in Movie Rentals

by | 3 minute read

A powerful slate of Hollywood box-office movie releases in 2012 led to a stronger movie rental market in the U.S. in the first quarter (Q1) of 2013, according to The NPD Group. Movie

New information released from NPD’s VideoWatch data service shows that overall rentals increased 10% in Q1 2013 compared to the same quarter the previous year. This increase represents a significant turnaround from the 12% year-over-year decline in movie rentals in the 2012 calendar year. Furthermore, the channels consumers used to rent movies shifted from DVD and Blu-ray Disc by-mail subscriptions and brick-and-mortar retailers toward pay-TV video on demand (VOD) and kiosk rentals. Please note that these figures do not include streams from Netflix Watch Instantly or other free or paid subscription, nor does it include movies downloaded as part of a subscription from cable companies and other MSOs.

Considering the 2012 performance, it is heartening to see these numbers bouncing back this year,” said Russ Crupnick, senior vice president of industry analysis at NPD. “It seems so obvious, but the trends provide more evidence that a strong slate of movies not only drive box office at the theaters, but also rentals later on.”

Kiosks, primarily from Redbox, remain the most popular source of movie rentals, accounting for 38% of movie units rented, up 1 share point from the same period in 2012. Rentals from brick-and-mortar stores continue to lose momentum, due to more rental alternatives and store closings, declining 1 point year over year. DVD and Blu-ray movie rentals from subscription-by-mail services posted a market-share decline of 4 share points, as more Netflix customers shifted from discs to streaming; however, the by-mail subscription model continues to represent a large percentage of the rental landscape. Good growth was seen for pay-TV VOD rentals from cable, telco and satellite providers, which is up 4 points versus year ago; pay-TV VOD rentals now match the once dominant store rental category, in terms of the number of units rented.

Argo,’ ‘Ted,’ and ‘Skyfall were among the most popular movie rental titles in the first quarter, which is unsurprising considering they were also very popular in theaters during the later part of 2012,” Crupnick said. “Just five years ago nearly 90% of the rentals in the US were from stores and disc-by-mail subscriptions. Clearly, the landscape has radically changed.”

Although this research focused on a portion of the movie rental market, other NPD research from the “Entertainment Trends in America” report indicates that roughly one in five consumers reported watching a movie that was included with their pay-TV subscription, and an equal number watched a movie using a subscription video on demand service such as Netflix Watch Instantly during the past three months. “Despite the growing popularity of subscription streaming options, consumers remain strongly interested in transactional rentals, whether discs from kiosks, or individual rentals from their pay-TV provider,” Crupnick noted.

[Source:  “VideoWatch/VideoWatch Digital” and “Entertainment Trends in America.”  The NPD Group.  29 Jul. 2013.  Web.  8 Aug. 2013.]