“Hollywood and Home Entertainment: Unkind Unwind”:
Films open on big screens but make money on small ones. After a four-month exclusive run in cinemas (a “window”, in Hollywood jargon) they become available as DVDs and Blu-ray discs — and, often, as on-demand videos and digital downloads. In 2010 Americans spent $18.5 billion on such things. Just $10.6 billion was spent on cinema tickets in North America. Another window opens about six months later, when films are sold to cable- and satellite-television companies. Perhaps two years after that they will be sold to free broadcast channels. Like cars, films become cheaper as they age.
Yet the once lucrative home-entertainment market is ailing. A steep decline in DVD sales has more than cancelled out growth in high-definition Blu-ray discs and electronic downloads. The overall home-entertainment market stands at 78% of its peak level, even before adjusting for inflation (see chart 1). Few think the drop is over. And nobody appears to believe that the market will recover the heights of five years ago. “In retrospect, that was a bubble,” says Tom Adams of IHS Screen Digest, a leading analyst of the market.
