Home Entertainment Revenue Still Down, Blu-Ray, Digital Downloads Up

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Traditional DVD sales and rentals continue to push down the whole home entertainment business.

The overall business is down 3.3% through six months of 2010 to $8.8 billion -- this according to home entertainment research company, Digital Entertainment Group. Low-cost rental discounters including Redbox and Netflix continue to have a negative effect on revenue.

Now the good news: The business only dropped 0.7% for the second quarter versus a year ago -- all this after losing 8% in the first quarter of 2010. DVD sales were down 3.0% in the second quarter -- which is good news as well. That's the smallest drop in several years.

Niche businesses -- Blu-Ray and digital downloads --- continue to grow.

Blu-ray sales were up 84% to $733 million in the first half of 2010. But analysts worry that four years after the format was aggressively launched and marketed, it still is a tiny piece of the entire business as compared to the standard-definition DVDs.

Total digital distribution is also growing, although at a somewhat lesser rate -- 23% for the first six months a year -- to around $1 billion. Digital downloads of movies rose 37% to $285 million, with traditional TV video-on-demand sales climbing to $865 million.

The study says there are 91 million homes with DVD players -- numbers that could be altered, depending on the growth of digital distribution.

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