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Digital entertainment spending surges past global box office

Global box office revenue hit a record in 2019, thanks to “Avengers: Endgame” and “The Lion King.” But the cinema was no match for the booming market for online viewing.

Consumer spending on digital home entertainment surged to $48.7 billion last year, up 24% from 2018, according to a new report from the Motion Picture Assn.

Worldwide theatrical ticket sales were $42.2 billion, up 1% from the prior year, said the MPA, the Washington-based lobbying group that represents the major Hollywood studios and Netflix.

Digital media — which includes subscription services and online purchases of movies and TV shows — accounted for nearly half (48%) of consumer spending on theatrical and home entertainment in 2019, up from 42% in the prior year, according to the MPA report. Meanwhile, spending on physical DVDs and Blu-rays declined 18.5% to $10.1 billion.

The data mark a significant milestone for the entertainment industry, which has seen rapid shifts in consumer behavior in recent years because of the rise of streaming services including Netflix and its burgeoning list of competitors. Digital home entertainment spending totaled $39.3 billion in 2018, according to updated figures from the MPA, which was shy of the $41.8 billion movies generated at the box office that year.

“The film, television and streaming industry continues to transform at a breakneck pace — and as this report will show, audiences are the big winner,” wrote MPA Chief Executive Charles Rivkin in the report.

The pace of change is likely to increase in the coming year as studios dramatically adapt their businesses by launching their own streaming services.

Walt Disney Co. launched Disney+ in November, charging $6.99 a month for access to its trove of films and shows. Earlier this year, Disney reported amassing an impressive 28.6 million subscribers, and the company is expected to ramp up programming for the service after the success of the “Star Wars” series “The Mandalorian.”

WarnerMedia owner AT&T Inc. is expected to enter the streaming wars with HBO Max in May, while Jeffrey Katzenberg and Meg Whitman’s short-form video engine Quibi is set to launch in April. Additionally this year, NBCUniversal is expected to heavily promote the debut of its streaming offering, Peacock.

The MPA has also evolved, welcoming Los Gatos, Calif.-based streaming giant Netflix into its ranks last year. Before 2017, the MPA’s annual market report focused on theatrical statistics, not home entertainment.

The report comes at a time when movie theaters around the world are grappling with the growing threat of the coronavirus pandemic. Theaters in China, representing 70,000 screens, have been closed for weeks. Italy this week shut down movie theaters and other venues to slow the spread of the virus. Multiplexes have remained open in the U.S. but are bracing for the effect on business as the number of cases rises here.

The MPA is expected to discuss the report’s statistics at CinemaCon in Las Vegas, the annual gathering of studios and exhibitors that begins March 30. The National Assn. of Theatre Owners, which organizes the event, has maintained that the show will continue despite coronavirus fears, but that it will take extra safety precautions.

“The Motion Picture Association and its member companies are closely monitoring reports from public health officials about the coronavirus and protective measures to limit its impact,” an MPA spokesman said in a statement late last month.

The 2019 box office high-water mark was the result of a slew of blockbusters, including Pixar’s “Toy Story 4,” Disney Animation’s “Frozen 2″ and the Chinese animated blockbuster “Ne Zha.”

The international box office hit $30.8 billion, up 3% from 2018, with the largest increases coming from Asian countries including Japan. Sales in Japan grew 19% to $2.4 billion. China’s box office, the second largest film market behind the U.S. and Canada, rose 1% to a record $9.3 billion.

Receipts in the U.S. and Canada were $11.4 billion in 2019, down 4% from the prior year. Attendance, or the number of tickets sold, declined 5% to 1.24 billion. Disney dominated the domestic marketplace, releasing seven of the top eight theatrical films in the U.S. and Canada last year.

Meanwhile, U.S. digital home entertainment sales, which surpassed the box office years ago, jumped 18% to $20.5 billion. Digital spending first matched domestic box office at $11.4 billion in 2016.

Theaters have long downplayed the potential threat of competition from streaming, arguing that people who watch movies and TV shows online are more likely to also pay to see movies on the big screen.

According to the MPA report, frequent moviegoers (those who go to the movies once a month or more) are more likely to own key technology products, including smartphones, video game consoles and streaming devices, than other groups. Seventy-three percent of frequent moviegoers own at least four types of tech products, compared with 58% of the general population, the report said.


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