Over the last year, two categories of US video entertainment spending carried the industry to growth: SVOD and the box office. The biggest losers were home video sales and rentals.
Video entertainment revenue increases 1.7% overall
In the US, consumers spent $33 billion on videos sales, video rentals, subscription streaming, virtual and traditional MVPDs, and at the box office in the second quarter of 2018. In the same quarter in 2017, consumers spent $32.5 billion.
Pay TV dominated the revenue picture for video entertainment in Q2 2018. 73% of every dollar spent went to cable, satellite, telco TV, and virtual MVPD operators, down from 76% in the same quarter last year. The box office’s share of spending increased from 8.7%% to 10.6%. Subscription streaming increased from 7.4% to 9.6%. Both video rentals and sales share fell over the period to reach 3.0% and 4.4% respectively.
Pay TV revenue declines
Cable, satellite, and telco TV provides shed more than 3 million subscribers between Q2 2017 and Q2 2018, according to Leichtman Research. Average revenue per subscriber remained relatively flat. The decline in subscribers resulted in a loss of $1 billion in revenue for the quarter.
vMVPD providers like Sling TV and DirecTV Now doubled subscribers from 2.5 million to 5 million over the period. As well, many increased prices $5 per month. Others introduced essential functionality, like network DVR for which they charge extra. As a result, spending on vMVPDs increased from $250 million to nearly $700 million in Q2 2018.
Subscription streaming increases 31%
According to DEG, subscription streaming spending increased from $2.4 billion to $3.2 billion in Q2 2018. Netflix remains the largest component of revenue. The company took in $1.9 billion in revenue from US streamers in Q2 2018, 60% of the total spending.
Video sales and rentals decline
The sale of discs and digital videos fell 12% over the year to reach $1.4 billion in Q2 2018. Similarly, video disc and digital rentals fell 7%, to end at $1 billion.
Digital sales and rentals showed some gains, while disc sales and rentals showed big losses. For example, disc sales fell 21%, and kiosk rentals were down 11% according to DEG. On the other hand, digital sales increased 10% while digital rentals showed a modest 2% gain.
Box office shows a big increase
Box Office Mojo says that box office receipts were $2.84 billion in Q2 2017 and increased to $3.5 billion in the same quarter in 2018. Big movie franchises were the engine driving the 23% increase. The top four grossing movies were Avengers: Infinity War ($672 million), Incredibles 2 ($426 million), Deadpool 2 ($309 million), and Jurassic World: Fallen Kingdom ($246 million.)
Why it matters
US video entertainment spending increased on continued strong growth in SVOD and an exceptional quarter at the box office.
Pay TV continues to dominate video entertainment spending, but its revenue and share is slipping.
Video sales and rentals continue to decline.
 Only stand-alone subscription service spending is included in DEG’s number. No revenue from Amazon Prime Video is included because it cannot be separated from general Prime membership.