No corporate demise of the past ten years was more evident than that of Blockbuster Video. The stores that were once ubiquitous across America were gone seemingly overnight, killed by the convenience of Netflix.While Blockbuster was the most famous casualty of the switch from physical to digital media, the numbers continue to grow favorably for digital streaming subscriptions.In a recent release by The Digital Entertainment Group, the year-over-year numbers for the third quarter show a decline in the revenues of traditional rentals and gains in subscription streaming:
- Brick and mortar rental revenue fell -30.42%
- Total subscription revenue (streaming and disc) grew 15.85%
- Subscription digital streaming revenue alone grew 26.12%
- Total US home entertainment spending fell -1.2%
The numbers indicate that subscriptions are more than filling the void left by the drop in spending on physical rentals. Rental revenue dropped from $244 million to $170 million, a decline of $74 million. At the same time, subscription streaming revenue rose from $815 million to $1.028 billion, a gain of $213 million year-over-year.Our 2013 Online Subscription Benchmark Report estimated that the online subscription industry generated about $18 million in revenue each year, from both B2C and B2B sites. Historically, B2B sites have been better at attaining profitability because of their higher-priced subscriptions. B2C sites like newspapers and consumer magazines have struggled, but this recent report shows that the large and popular entertainment industry can find stability and profitability through a digital subscriptions business model.
