My Two Cents

The Digital Bits presents: The State of Physical Media in 2020 (So Far...)

July 7, 2020 - 6:36 pm   |   by
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So... a friend of mine asked me last night on social media what impact the pandemic was having on physical media sales so far this year. Specifically, he wanted to know if there had been any kind of a bump in disc sales resulting from all of the coronavirus lockdowns, what with so many people suddenly forced to stay at home.

I knew, of course, what we’ve been seeing here at The Digital Bits in terms of those trends—also what we’ve been hearing from you guys, our readers, as well as our retail sources. But the question got me thinking. And then I really wanted to know: Do the actual sales numbers reflect our assumptions? Or might something be happening because of the pandemic that’s surprising in terms of physical media sales?

With that in mind, I started digging. Before long, I found myself neck deep in data—actually a pretty good place to be if you really want to get to the bottom of questions like this.

I turned to a pair of sources that are always reliable: The Digital Entertainment Group’s excellent (and quarterly) Home Entertainment Reports, and also Media Play News’ in-house home entertainment market research. [Read on here...]

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Now, as many of you know, I’ve reported previously on the yearly decline of physical media sales. But if you’ve missed it, here are the gory details: Physical movie disc sales have dropped every year for the last 9 years, and in the last 3 years by double-digit percentages (per the DEG, the decline was 18% in 2019, 14.6% in 2018, 14.1% in 2017, 9.6% in 2016, 12% in 2015, 10% in 2014, 8% in 2013, 5% in 2012, and 12.3% in 2011)—a long, steady, but recently more precipitous decline.

That is the reality that disc fans are facing.

We here at The Bits don’t like it any more than you guys do, because we’re movie and disc fans first and foremost. But those are the numbers. That knowledge is what motivated my recent feature on Kaleidescape here at The Bits, an effort to glimpse ahead to what a best possible discless future might look like for those of us who love watching movies at home (and especially the disc-quality experience of them). The thing is, if all you see as a fan is the rich bounty of deep catalog titles that are finally coming to disc from companies like Shout, Arrow, Criterion, and Kino right now, you could easily fool yourself into thinking that all is well with the disc market. (It’s not.)

So back to 2020... after really getting in the weeds with the disc sales data, here’s what I found:

The DEG itself posted its official Q1 2020 Home Entertainment Report back on April 30th, covering the first 13 weeks of the year. What they found was that total home entertainment spending (all categories) was up 15% in Q1 compared to the same period last year.

Total Digital spending was up 24% during that period (the specific breakdown was +12% for Electronic Sales, +19% for VOD, and +27% for Streaming). That’s the good news.

The bad news is that Packaged Goods sales (read: Movie Discs) were down 22.5% from Q1 2019.

Now, we have to be a little careful with that number. Q1 sales are often lower than the rest of the year for a couple of reasons. First, because the previous year’s holiday shopping season has just ended, consumer spending is typically down anyway. But also, there just aren’t as many big new release movie titles arriving on disc in Q1 to buy.

So one would expect sales to go up a bit in Q2. And that’s where it gets complicated this year, because Q2 (covering the 13-week period from early April to the end of June) is when many states here in the US began their coronavirus lockdowns. That means retail stores were closed, disc supply chains were disrupted, and new films stopped being released into theaters. (Note that the last item—films not going into theaters—will start to show up in disc sales data in Q3 and Q4.) On the other hand, with so many people stuck at home, maybe they purchased more discs—especially catalog titles, which are conveniently more abundant.

I certainly suspected this was true, and indeed that’s what the data shows. But, as before, there’s good news and bad news.

The Digital Entertainment Group’s Q2 2020 Home Entertainment Report isn’t going to be available for another few weeks yet, so that’s where I turned to the Media Play News market research. Here are the weekly breakdowns of disc sales revenue for Q2:

Weekly Disc Sales Revenue (Q2 2020 – all formats)

  • 4/4 – disc sales down 16.40% from the same week in 2019
  • 4/11 – disc sales down 16.57%
  • 4/18 – disc sales down 37.15%
  • 4/25 – disc sales UP 11.52%
  • 5/2 – disc sales UP 6.91%
  • 5/9 – disc sales UP 4.95%
  • 5/16 – disc sales UP 16.05%
  • 5/23 – disc sales down 1.41%
  • 5/30 – disc sales down 5.31%
  • 6/6 – disc sales down 15.22%
  • 6/13 – disc sales down 42.90%
  • 6/20 – disc sales down 12.82%
  • 6/27 - disc sales down 23.20% [Updated 7/8]
  • AVERAGE (FULL 13 WEEKS) = down 10.12% [Updated 7/8]

As you can see, the final week of the quarter hasn’t yet been reported, but should be up any day now. As you can also see, there was indeed a pandemic lockdown “bump” in the disc sales data starting at the end of April and continuing for the next four weeks into May. But then that bump leveled out and the decline trend resumed.

Averaging out the 12 weeks we have data for, the result is a 9.03% decline in disc sales revenue for the quarter versus the same period of time in 2019. (I would expect the final number to be between 9-13% when that final week is accounted for—I’ll post an update here when we have the data.)

[Editor’s Note: The final data for week 13 (ending 6/27) is now in—down 23.20%—giving us a final average for the quarter of down 10.12%.]

I would also expect the DEG numbers for the quarter to be similar—despite being from different sources, the two data sets correlate very well. You’ll recall that I mentioned the DEG Q1 2020 report showed a Packaged Goods sales decline of 22.5% from Q1 2019. Here’s the weekly Media Play News research for that same period:

Weekly Disc Sales Revenue (Q1 2020 – all formats)

  • 1/4 – down 23.27%
  • 1/11 – UP 1.92%
  • 1/18 – down 7.04%
  • 1/25 – down 3.85%
  • 2/1 – down 11.12%
  • 2/8 – down 25.53%
  • 2/15 – down 30.11%
  • 2/22 – down 32.79%
  • 2/29 – down 6.76%
  • 3/7 – down 24.78%
  • 3/14 – down 34.83%
  • 3/21 – down 30.58%
  • 3/28 – down 44.92%
  • AVERAGE = down 21.05%

So year to date, it appears that physical disc sales are down about 15% from last year—right in line with the declines we’ve seen in previous years.

[Editor’s Note: That prediction is now correct based on the final data for the last week of Q2 (posted above). Year to date, disc sales revenue is down 15.58% from the same period in 2019.]

Now then, let’s look ahead to the rest of 2020 and make a gut-level prediction.

Q3 is a bit of a wildcard. Given the current state of the pandemic, it’s possible that parts of the country could be headed back into lockdown by the end of the summer (despite efforts in many places to reopen the economy). So we don’t yet know if people will be stuck at home again. What we DO know is that there have been few new release films in theaters in recent months, which means few new release titles coming to disc in Q3 and Q4. We also know that Hollywood studio and indie distributor operations have been severely disrupted, that retail has been disrupted, and that distribution chains have been disrupted. So it’s almost impossible to predict what Q3 will look like in terms of disc sales, other than to say that I don’t think there’s any way those sales will be up for the period from last year.

But here’s where things could really get ugly: Most of the year’s retail sales happen in Q4, given Black Friday and the holiday shopping season. And a lot of our retail sources are telling us that they don’t foresee anything like a normal holiday shopping season this year. Once again, we don’t know how many people may be stuck at home. We don’t know where the economy as a whole will be by Q4. But we do know that there still won’t be many new release films in theaters or coming to disc (though it does appear that many of the studios are at least trying to ramp up their catalog movie disc releases for the rest of the year).

So what does all this mean for physical disc sales in 2020 as a whole? It’s almost a certainty that they’re going to be down again this year over 2019. Very likely, they’ll be down again by double-digit percentages. And if I had to make an educated best guesstimate right now, I think we’re looking at a decline of anything from 9% to 30% for the whole year. But which end of that range the decline will be closer to is impossible to say right now.

The two points to take away from all of this are that 1) disc sales are likely to be down again in 2020, and 2) the stay-at-home “pandemic boost” in disc spending was real but brief and is unlikely to make up for the larger decline trend for the whole year.

So that’s where we are. Watch this space, because we’ll be keeping our eyes on all of this data very closely in the weeks and months ahead.

For now, buy all the discs you can!

And as always, stay tuned...

(You can follow Bill on social media at these links: Twitter and Facebook)

 

 

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