DEG Releases Q1 2023 Digital Media Entertainment Report

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DEG: The Digital Entertainment Group announced it released its first quarter 2023 Digital Media Entertainment Report for the United States.

For more information visit: www.degonline.org

Unedited press release follows:

DEG: The Digital Entertainment Group today released its First Quarter 2023 Digital Media Entertainment Report compiled by DEG members, tracking sources and retail input.1

Home Entertainment Spending Rose Almost 15% to $10.1 Billion in 2023 First Quarter
Gain Driven by 22% Increase in Subscription Streaming as Spending on Digital Transactions, Physical Discs Declines

Consumers spent $10.1 billion on movies and television shows consumed at home and on the go in the first quarter of 2023. Spending rose almost 15 percent from the $8.8 billion consumers spent in the first three months of 2022, a growth achieved even as consumers returned to typical travel and activity patterns that had been curtailed during the COVID-19 pandemic.

Among the trends for the First Quarter 2023:

• The 2023 increase was fueled by a 22 percent increase in subscription streaming2, which rose to $8.7 billion, from $7.1 billion in the first quarter of 2022, as targeted and general entertainment services continued to add subscribers with new content, pricing options and ad-supported tiers. First quarter 2023 growth was more robust than in 2022, when streaming spending grew 18 percent in the first quarter and for the full year.

• Box-office spending on titles released to the home in the first quarter continued to grow back toward pre-pandemic levels, jumping almost 15 percent to $2.2 billion, a positive sign for home entertainment spending moving forward in 2023.

• Consumer spending on digital purchases (EST3) and rentals (VOD3) fell about 12 percent in each category during the first quarter, although a portion of that decline is being driven by new release and can be explained by release schedules and windowing, with several large titles releasing in the very last week of the quarter, including Avatar: The Way of Water and Creed III.

• Catalog content was down only slightly for the quarter, a significant improvement from the same time last year when catalog was trending down nearly 20 percent as the market began to normalize after pandemic era highs.

• Premium releases still enjoy strong consumer interest and spending in this window is included in DEG tracking3.

• Among the first quarter’s best-performing titles across transactional formats were Avatar: The Way of Water (Disney); Black Adam (WBD); Black Panther: Wakanda Forever (Disney); Cocaine Bear (Universal); Creed III (MGM); Knock at the Cabin (Universal); A Man Called Otto (Sony); M3gan (Universal); Plane (Lionsgate); Puss in Boots: The Last Wish (Universal); Top Gun: Maverick (Paramount); and Yellowstone: Season 5 (Paramount).

• Consumer spending on rentals and purchases of physical disc formats (DVD, Blu-ray and 4K UHD Blu-ray) continued to decline, falling more than 26 percent, to $377 milllion4 in the quarter.

• Ad-supported premium AVOD and FAST content reached an estimated advertising revenue of almost $4.3 billion in the first quarter of 2023, according to estimates from Omdia5, as more major streamers diversified their offerings to include lower cost subscription plans with ads. Omdia estimates show ad revenue grew by almost 8 percent in the quarter compared to Q1 2022. This is a marked slow-down in year-over-year growth compared to the previous quarter (Q4 2022), when growth was 22 percent. Macro-economic uncertainty and a tough comparison with early 2022, when a robust post-COVID ad spend bounce-back drove gains, contributed to the relatively modest growth of streaming ad revenues in Q1 2023 over Q1 2022.

1 Please note, these numbers are preliminary. Contact DEG for updates.

2 SVOD data sourced from Omdia.

3 Digital transaction spending (EST and VOD) includes premium releases, but not Disney+ Premier Access titles.

4 Physical product category includes consumer spending for sell-thru and rental disc transactions.

5 Ad revenue estimates sourced from Omdia. Includes Discovery+, Disney+, Freevee, HBO Max, Hulu, LG Channels, Netflix, Paramount+, Peacock, Pluto TV, Roku Channel, Samsung TV+, Tubi, Vix, Vizio WatchFree+,
as well as legacy TV Everywhere services and other premium AVOD/FAST.

  • All figures are net advertising revenues. They denote the revenue generated by a media owner from advertising. – Excludes social video services such as YouTube or TikTok.
  • For hybrid services, such as Hulu, the data represents only the advertising revenue and does not include
    subscription revenue generated by the hybrid tier.
  • Data represents the U.S. only and is preliminary.