The U.S. subscription video on demand (SVOD) business grew total revenue by 22.22% to over $8.7 billion in the first quarter, the biggest rate of quarterly expansion since the go-go streaming days of the 2020 pandemic. 

The data comes courtesy of Informa-owned research company Omdia, which delivers SVOD data as a third party in the Digital Entertainment Group's quarterly "Home Entertainment Spending" reports. 

In the first quarter of 2022, the U.S. subscription streaming business expanded by 18%, according to Omdia. 

Netflix, which is far and away the biggest SVOD company both globally and domestically, reported an uptick of 7.7% in first-quarter revenue in the U.S. and Canada, bringing in more than $3.6 billion. Netflix did this despite having fewer UCAN customers year over year -- 74.58 million in Q1 2022 vs. $74.40 million in Q1 2023. Indeed, most major U.S. subscription streaming services raised prices in 2022. 

Notable in the broader report from DEG was the decline of almost all traditional "home video" channels, including the aggregate physical media business, which was down nearly 27% year over year to $377.25 million.

Meanwhile, the selling of streaming movies and TV shows, electronic sell-thru, was down 12.31% to  $564.35 million in Q1. VOD was off 11.5% to $443.47 million. 

DEG said the transactional numbers should improve with the revived theatrical pipeline. The firm, which gets its data from studio suppliers, attributed some of the Q1 sluggishness to the fact that the bigger rental and sale titles in the quarter, including Avatar: The Way of Water and Creed III, hit the homevid market late in the quarter.

With the rise in SVOD, total "home entertainment" spending rose to nearly $10.1 billion, up almost 15%. Of course, take SVOD away and classify it as something else -- "pay TV," maybe? -- and you'd get a very different aggregate figure for this industry. 

The Great Streaming Recession is just not a thing. 

U.S. consumer spending on subscription streaming jumped 17.3% in 2022, surpasing $30.3 billion. 

This latest year-over-year growth, reported by the Digital Entertainment Group (DEG), comes after domestic SVOD spending expanded by nearly 20% in 2021 and 37% in 2020. 

Where does $30 billion plus rank a sector in terms of the overall domestic entertainment business pie? Consider that North American theatrical releasing generated $7.36 billion last year, according to Box Office Mojo. 

The U.S. broadcast station industry was projected by S&P Global Market Intelligence to reach $36.47 billion in ad revenue in 2022. 

By 2027, Research and Markets predicts that the North American pay TV revenue will be roughly half of what it was at its peak in 2014, sized roughly at $53 billion.

So the sector that many large entertainment companies are pulling back from quite a bit these days could soon be their industry's biggest money generator. 

Granted, growth is decelerating a bit. 

In the fourth quarter alone, SVOD providers generated over $7.9 billion in U.S. revenue, a 15.4% uptick. In the Q4 2021, domestic SVOD spending expanded by 19.25%.

But the notion that having more than eight major SVOD competitors vie for consumer attention has saturated a market dealing with inflation and other economic pressures? It doesn't appear at all to be true. 

Of course, with major suppliers like Warner Bros. Discovery cutting back on content while raising prices, who knows if SVOD's revenue growth will hold in 2023. But it certainly didn't drop into a recessionary hole last year, as many of us expected it might after Netflix delivered its "Black Tuesday" April 19 Q1 earnings report. 

DEG is a legacy research component of what used to be known in the halcyon days of Blockbuster Video as "home entertainment," and it still mainly gets its data directly from entertainment company suppliers. The SVOD information, however, comes from Informa research unit Omdia. 

From "packaged goods" sell-through revenue (sales of DVDs and Blu-rays were down 20% to around $1.6 billion in 2022) to total movie and TV show rentals (down nearly 15% to $2.2 million), not even the savior that was Top Gun: Maverick could boost the erstwhile "homevid" industry from losing altitude last year. 

Notable was the 14% drop in "VOD" sales to $1.6 billion. This sector includes transactional streaming rentals from Amazon, Google, Vudu and countless other internet suppliers, as well as pay TV on-demand rentals. 

The transactional streaming business still seems to be growing, at least narrowly. "Electronic sell-thru" still grew last year by 1.65% to just over $2.5 billion. 

We suspect it's the declines in pay TV movie rentals that's dropping the whole VOD bottom line, with the linear cable and satellite business shedding customers like never before, and more and more customers finding what they want within their SVOD smorgasbords. 

Click on the arrows icon below to expand and see DEG's full-2022 chart. 

U.S. subscription streaming revenue grew by 17.3% in the third quarter to nearly $7.7 billion, a slight acceleration from the 16.9% growth rate for the domestic "SVOD" industry in the same period of 2021, according to new figures from the Digital Entertainment Group (DEG).

Year to date, paid U.S. streamers were up 17.5% to $22.3 billion. The industry was up 19.5% at this time last year.

The remarkable resiliency comes amid generational inflation for the global economy, and more specifically, recent significant price increases for a number of leading SVOD services.

Earlier, Netflix, the largest subscription streaming company in the U.S. and the world, reported a 9.6% year-over-year sales increase of $3.062 billion in the U.S. and Canadian region during the third quarter.

DEG culls data directly from content suppliers, measuring  consumer spending in the U.S. on everything from DVDs to pay TV VOD.

For the third quarter, total spending on these digital entertainment formats -- including SVOD -- was up 13.1% to $9.1 billion.

Sales of packaged media continue to whittle away, down another 16% to $361.6 million in the third quarter. Consider that 20 years ago, DVDs drove domestic home entertainment spending to $23 billion.

Also read: U.S. Subscription Streaming Revenue Spikes 17% in Q3 to Nearly $16.4 Billion

Even factoring in SVOD -- which blurs the lines between the traditional "TV" and "home video" businesses -- the paid video business still isn't its old pre-disrupted self, adjusting for inflation.

But the new formats, beyond just SVOD, continue to show growth.

Electronic sell-through (EST) grew by 9.5% in the third quarter to $611 million, with consumers now spending almost twice as much buying movies off transactional services like Amazon, Google and Vudu vs. buying DVDs and Blu-rays.

In fact, with Paramount providing a hot EST title to the market in Q3 in the form of Top Gun: Maverick, the overall sell-through biz came close to being flat in a quarter for the first time in years (down only 1.6% to $972.6 million).

The Great Streaming Recession might be a myth, after all. 

In fact, the growth rate in U.S. consumer spending on subscription video-on-demand (SVOD) services doesn't even appear to be decelerating. 

Omdia, an Informa-housed research company that provides SVOD spending data through the Digital Entertainment Group's (DEG) quarterly state-of-the-video-business reports, said that U.S. SVOD revenue grew by 16.6% to $7.426 billion in the second quarter.

This is juxtaposed by a very similar year-over-year growth rate of 16.8% in 2021. 

Market leader Netflix saw its global revenue expansion slow from a rate of 19.4% in the second quarter of 2021 to just 8.6% in Q2 of this year. And Netflix is projecting global revenue growth of just 4.7% in the third quarter. 

With Netflix losing customers in the U.S. and Canada in the last two quarters, an industry-wide assumption had begun to take hold that maybe the subscription streaming business isn't technically in recession ... but that it's growing more slowly than ever.

Relying mostly on data supplied directly from the media/entertainment companies, DEG tallies non-advertising-related spending on movies and TV shows. And with the COVID-fueled shutdown of the theatrical release pipeline through most of 2020 and virtually all of 2021, SVOD is the only sector DEG tracks that is not in recession.

This includes the rental and sale of digital movie and TV shows -- the VOD business was down 15.2% in Q2, for instance. 

But with the theatrical pipeline coming back to life, DEG argues that the trend lines are pointed back up. In the second quarter of 2021, for example, both the VOD and "electronic sell-through categories were down nearly 40%. 

U.S. subscription streaming revenue grew 16.9% to $6.93 billion in the first quarter, representing a sizable slowdown from the 27.2% expansion the SVOD sector experienced in the same first-three-month period of 2021, according to media company figures released by the Digital Entertainment Group (DEG). 

The DEG's indicator of an overall deceleration in growth comes after Netflix, the biggest SVOD service in both the U.S. and the world, reported global revenue expansion of just 9.8% in Q1 vs. 24.2% in the first quarter of 2021. 

And there have been other indicators that Netflix's slowdown isn't a video business anomaly.

Disney, for instance, reported only 15% growth in average revenue per subscriber for Disney Plus' U.S. and Canada operations for the period covering January 1 - April 2. Disney also said that Hulu's SVOD business, extracting Hulu+ Live TV vMVPD revenue, shrank 4% in its fiscal second quarter.

The DEG said its SVOD data comes from Omdia, a division of the Informa research conglomerate. 

For its part, DEG has its roots in measuring home video product sales by the studios. And physical media (i.e. DVDs and Blu-rays) continued to fade in the first quarter, with sales down nearly 19% to $388.5 million. They declined a 25% clip a year ago. Rentals of said discs were down 17% to $196.1 million. 

The VOD business continues to slip right along with overall pay TV distribution, down 10.8% to $501.1 million in Q1. But "electronic sell-thru" -- sales of movies from digital transactional channels operated by companies like Google, Apple and Amazon -- was up 6.7% year over year to $643.6 million. 

At a time when COVID-19 restrictions are easing and many U.S. consumers are spending less time in their living rooms, here's some good news for the video biz:

Overall, "home entertainment" spending was up 10.9% in the quarter to nearly $8.7 billion, DEG said, representing a narrow year-over-year growth acceleration (it was up 10% last year).

Further buoyed by the launch of two new services, Discovery Plus and Paramount Plus, the U.S. subscription streaming business expanded by nearly 20% in 2021, reaching $25.3 billion, according to figures published Monday by Digital Entertainment Group (DEG). 

The U.S. SVOD industry grew more than 19% in the fourth quarter alone, to $6.64 billion, the group also said. 

DEG, which has collected data from the major studios since the VHS era, reported a 7.8% uptick in the overall "U.S. home entertainment" business to around $32.3 billion, driven primarily by this explosive growth in subscription streaming. 

However, 2021 continued to present volatility for a business that the DEG defines as including not only SVOD, but rentals and sales of movies and TV shows in both physical and digital formats. 

Notably, DEG doesn't tally the premium video-on-demand, the window in which movies are simultaneously released in theaters and home streaming. In a what continued to be a highly disrupted global market for theatrical distribution, studios including Disney released a number of films simultaneously in theaters and on SVOD service Disney Plus, adding a $30 surcharge. WarnerMedia, meanwhile, released its entire 2021 Warner Bros. film slate day-and-date on HBO Max, without adding any additional consumer price beyond the monthly subscription. 

DEG said its studio constituents generated around $525 million last year from premium VOD releasing. 

This expansion of "PVOD" not only cut into the theatrical revenue pie, but also took a bite out of the transactional business for U.S. home entertainment. 

Total "electronic sell-thru" for 2021 -- the business of selling digital copies of movies and shows -- was down 19.2% to just over $2.42 billion. "VOD" -- the business of renting movies and shows digitally -- was off nearly 23.8% to $1.77 billion. 

Finally, sales of movies and shows on DVD and Blu-ray were down nearly 20% to jut under $2 billion. Rentals of discs, meanwhile, dropped 21.2% to $822.7 million. 

DEG said the return of theatrical distribution in Q4 invigorated the overall disc business a bit in the fourth quarter. DVD and Blu-ray sell-thru was down only 14% during that Q4 period. 

U.S. consumers spent $6.38 billion on subscription streaming in the third quarter, up 16.9% from the same three-month period of 2020, according to the Digital Entertainment Group (DEG), which bases its findings on studio data. 

Overall, the U.S. home entertainment business grew 9.5% to $796 billion, DEG said, but SVOD spending accounted for all of that expansion. From packaged DVD and Blu-ray sales to electronic-sell-through of digital, all other home entertainment sectors were down from the COVID-stricken 2020, a pre-vaccine period in which U.S. consumers were cocooned at home en masse. 

Several key subscription streaming platforms have joined the market since the third quarter of 2020--Discovery Plus and Paramount Plus. And others, such as HBO Max and Apple TV Plus, have grown their audience bases considerably over the past 12 months.  

It's these relative newcomers which seem to be driving overall growth. Netflix has grown its domestic subscriber ranks by less than 1 million over the last 12 months

So far in 2021, U.S. spending on subscription streaming services is up 19.5% to nearly $18.6 billion.

The revenue pie has indeed expanded for the recent flood of new entrants to the U.S. SVOD business. 

According to the Digital Entertainment Group (DEG), domestic spending on subscription streaming rose 21% in the first six months of 2021 to $12.2 billion, and 17% in the second quarter to $6.3 billion. 

The growth comes despite a tough comparison to the second quarter of 2020, during which most U.S. consumers were tightly quarantined under COVID-19 restrictions, with video streaming usage spiking accordingly. It also comes as these same restrictions significantly slowed production of new original content. 

DEG attributes the growth to interest in the flurry of SVOD services that launched over the previous 18-month span, a list that includes Apple TV Plus, Disney Plus, Quibi, Peacock, HBO Max, Discovery Plus and Paramount Plus. 

Yes, the number of U.S. SVOD services is definitely up more than 21%. The pie is bigger, but it still might not be big enough for everyone. 

Overall, DEG said the U.S. “home entertainment” sector expanded its sales by 5% to $15.7 billion in the first half of 2021. 

Included in that bag is subscription streaming, pay TV VOD, digital rental and sales of movies and TV shows, and physical (i.e. DVD and Blu-ray) distribution of programming. 

Disc sales plunged another 25.6% in the first half of 2021 to $947.56 million. 

“We’re adapting the expertise we have into a new customer experience” as AMC Networks plunges more deeply into streaming video projects, Joshua Reader, president, distribution and development at the company, explained in his opening remarks at the Digital Entertainment Group’s Direct-to-Consumer Expo. “We decided not to compete with subscription VOD,” he said, describing AMC’s plans to focus on some - but not all – of its program inventory. 

Reader’s outlook topped a wide-ranging session on the “Maturing D2C Landscape, which also included Deloitte’s latest data on the fast-churning audience attitude toward streaming channels along with the unveiling of DEG’s new “official” terminology for the growing roster of home viewing options, including PEST and PVOD services. The avalanche of information emerged during DEG’s streaming online Expo on Thursday (Feb. 25). 

Also Read: AMC Networks Touts Addressable Ad Capability Going into Upfront

Reader acknowledged that AMC’s “DNA is in B2B [business-to-business] delivery to cable operators.” But he quickly noted that its specialty networks such as Acorn and ALLBLK “give us the opportunity to offer D2C” services to specific audiences.

“We have those true consumer relationships plus the wholesale relationships,” Reader said, explaining the revised targeting strategy as AMC modifies its distribution arrangements. He said that the new AMC Plus service “lets us focus on how we’re going to market with partners.” Reader described the plans as including “more disciplined … marketing” without putting “immense funds into D2C.” He said the increased efforts help viewers “find other content on those platforms.”

“We are hyper-focused on serving those audiences,” Reader said, adding that, “We think there’s a robust future in offering fans an individual service and if they want something more, they will pay more for a bundle of programs such as AMC+.” He cited other AMC assets, such as Shudder and IFC Films, and emphasized his belief of the “good synergy” via D2C that will evolve if AMC exposes its viewers to shows they might “not have found on their own.” 

Also Read: Streamers Look Outside the Lines

Susan Agliata, director of business development and OTT partnerships at Samsung, echoed the expectation of more consolidation in the post-pandemic streaming world. 

She believes that viewers will remain fixated on linear TV, but she reminded webinar attendees that, “Our work has just begun to foster maturation of this industry.”

Churn and Consolidation Will Accelerate; Ad Acceptance Increasing, Deloitte Explains

Reader’s plans for AMC’s shift toward direct-to-consumer delivery offered an appropriate prelude to the research findings from Kevin Westcott, vice chairman, national Technology, Media & Telecommunications (TMT) Industry Leader of Deloitte. Using data from Deloitte’s latest consumer research survey, Westcott described how consumers bought more video subscriptions as the COVID-19 isolation continued, but that churn has increased during the pandemic’s later stages. He also predicted that consumers will accept more online advertising on streaming channels – depending on how it’s structured. 

“Consumers are telling us that they are overwhelmed by having multiple subscriptions,” Westcott said, noting that there are more than 300 streaming options. In the first six months of the pandemic, 46% of streaming video subscribers eliminated at least one streaming service. The Deloitte survey found that 28% of consumers intend to reduce the number of entertainment subscriptions they buy, which among millennials is an average of 17 services. 

By October, 28% of streaming customers said they were dropping a service because the free or discounted trial period had ended. 

For example, in May of 2020, only about 9% of streaming video customers were adding and cancelling streaming services, but by October 2020, about 24% of streaming viewers were churning like that – far more than the number who were merely adding or cancelling providers, according to Deloitte’s data. 

Westcott predicted that there will be a “reaggregation of content” with the largest platforms adding more options. He also pointed out that the reasons for cancellation are changing. The top reason (cited by 39% of subscribers) for dropping a service had been because viewers had “finished watching a show or series” that had caused them to sign up for the service. In addition, a basic “economic aspect” kicked in when “consumers recognized they were paying $60 or more per month, which was comparable to their old cable bills,” Westcott added.

Deloitte’s research showed that streaming viewers “are very willing to accept advertising, but they are deeply annoyed by constant repetition of the same commercials. It found that 43% of viewers during the COVID-19 era say they would like an ad-only format with no monthly fee and no more than 12 minutes per hour of advertising. About 35% would pay up to $12 a month for a service with no advertising, according to the Deloitte data. 

Nonetheless, Westcott’s study did not offer a specific roadmap into the D2C landscape. He said that “content is still king, but bundles [remain] the incentive to subscribe.” Citing the response to a question about “Why do you subscribe to a specific streaming service,” Westcott noted that the among the most recent responses, 55% of viewers said they want “to watch a broad range of shows and movies” (higher than in the pre-COVID-19 study) but that 43% said they signed up to see “new, original content not available anywhere else” (slightly lower than in the first months of the pandemic.)

PEST, PVOD Part of “Industry-Standard” Terms to Clarify VOD Variants

In addition to the executive perspectives and data about the move toward D2C services, DEG unveiled its new lexicon of the growing variety of on-demand services. 

Declaring that consumers – as well as some media companies and analysts who follow the video industry - are confused about the expanding viewing options, DEG’s D2C Alliance Steering Committee issued a list of “industry terminology.” 

In addition to defining familiar digital terms such as OTT (Over-The-Top), AVOD (Ad-supported Video-On-Demand) and new terms such as FAST (Free Ad-Supported Television, referring to Internet-delivered linear TV channels), the new lexicon seeks to specify neologisms. For example, PEST is “Premium Electronic Sell-Through,” described as a “one-time fee [for] a specific piece of digital content” available prior to its “traditional release window.” PVOD (“Premium Video-On-Demand) offers content for “limited-time access for a one-time fee.” TVOD (Transactional Video-On-Demand) services charge a one-time fee for viewing a specific piece of content for either a limited period (typically 24 or 48 hours) or an extended period.

DEG explains that some services may fall into more than one category, noting for example that Amazon Prime offers both TVOD and SVOD components and Peacock’s menu has both free AVOD to SVOD products.

“PEST and PVOD are generally offered through transactional services but may also be presented for added fees on subscription services, such as Disney+’s offering of Mulan,” according to the DEG nomenclature. 

“Establishing accepted industry terminology is an important early step in both industry relations and consumer outreach,” said Amy Jo Smith, DEG President and CEO. “This is an important milestone for the D2C Alliance as it moves forward with a strong base of support across platforms and services, device makers and content owners and distributors.”

DEG said the new terminology is “a first step in proactively addressing key issues” affecting future video distribution. 

U.S. consumers spent more than $26.5 billion on SVOD subscriptions and buying and renting movies and TV shows in 2020, up 32% over 2019, according to the Digital Entertainment Group.

DEG, which gets its data from content suppliers, said total home entertainment revenue from all formats, including everything from Netflix to DVDs, surpassed $30 billion last year.

DEG’s numbers used to be driven by disc sales and rentals. But sales of DVDs and Blu-rays declined another 26% in 2020 to just under $2.5 billion, while rentals dropped another 27% to $1.04 billion.

The big home entertainment driver these days, of course, is subscription video on demand. Culling data from Informa, DEG said SVOD services including Netflix, Amazon Prime Video, Hulu, Disney Plus and HBO Max, generated more than $26.5 billion in 2020 in the U.S., an increase of 32.6%. 

With digital sales of movies spiking 16% to nearly $3 billion, and VOD rentals up over 18.3% to $2.3 billion, total spending on digital video reached its zenith in the U.S. last year. 

It was the first time the “transaction” portion of the video business has grown in more than a decade, DEG said. 

DEG's numbers don't include revenue generated by ad-supported video-on-demand services such as Amazon Freevee, Pluto TV and Tubi. 

Also notable: DEG said Disney’s Frozen 2 was the most consumed movie in U.S. homes in 2020, followed by Jumanji: The Next Level and Star Wars: Episode IX - The Rise of Skywalker. ▪️

Revenue from subscription VOD streaming services was up 38.7% year over year to more than $5.5 billion in the third quarter, according to the Digital Entertainment Group.

But the home entertainment trade org, which gets its data directly from media companies, found that the selling and renting of movies and TV shows has actually been way off during the pandemic. 

Electronic sell-through (that is, purchasing titles off transactional platforms like Vudu, Fandango, Amazon, et. al) fell nearly 14% in Q3 to around $601 million. 

Notably, the disc business got a lot closer to the abyss, with sales declining 34.3% in the quarter to just $434.3 million. DVD and Blu-ray rentals fell 34.4% to around $225 million. 

As DEG noted, domestic box office was off a staggering 92.4% in Q3 and nearly 40% for the year. With studios choosing to hold back theatrical titles rather than put them into a release pipeline that effectively lacks a theatrical window, there’s not that much for consumers to buy or rent right now.

The aggregate business of providing U.S. consumers with movies and TV shows at home is still up significantly during the pandemic—up 17.47% to nearly $7.3 billion in the third quarter, and up 23.29% to $22.2 billion for the first three quarters of 2020.

In yet another light-shedding on consumer video usage during the pandemic, the Digital Entertainment Group said that overall spending across home entertainment formats was up 34% in the second quarter, year over year to $8 billion. 

Due to the rise of streaming, the home entertainment business was already growing--it was up nearly 18% to $7.1 billion in Q1. But pandemic usage habits nearly doubled revenue growth. 

Total home entertainment revenue for the first six months of 2020 grew by 26% to $15.1 billion.

Notably, DEG collects its sales data directly from the studios, not consumer surveys, rendering its mid-year home entertainment revenue report a somewhat different perspective on pandemic behavior. 

Revenue was up across all formats, but subscription streaming (i.e. Netflix and other SVOD services) was up the most, up 42.4% in the second quarter, to $5.54 billion. 

Electronic sell-through and video-on-demand for movies and TV shows on platforms like Vudu and Amazon was up 54% in the second quarter to $1.5 billion.

DEG said that top movie titles during the second quarter include Bad Boys for Life, Star Wars: The Rise of Skywalker, Sonic the Hedgehog, Harley Quinn: Birds of Prey, Jumanji: The Next Level, Bloodshot, 1917, Dolittle and The Call of the Wild.

Total revenue for all digital home entertainment products came in at nearly $7.1 billion in Q2, according to DEG, up 44.7%. Sales of physical media—Blu-ray and DVD—continued to decline, dropping 17.2% in the first half of 2020 to $1.27 billon. 

Notably, DEG doesn’t include the fast-evolving premium VOD business in its mid-year state of the home entertainment industry report. 

When you rearrange the letters of "reality" (as in "virtual" or "augmented"), you get "retail" with a leftover "y."

As in "why."

Several reports last week underscored the shifting realities in the retail business, while a separate influx of developments slammed home the imminence of altered video reality, whether you like it or not. And, yes, the two categories are connected.

As in "interconnected."

Best Buy, the electronics retail behemoth, surprised Wall Street last week by reporting a small increase in quarterly revenue -- thanks almost entirely to a sizeable 23% year-over-year climb in online sales (about $1 billion in the first quarter), which offset in-store sales declines. Analysts quickly noted that Best Buy's unexpected jump came amid devastating consumer electronics (CE) fates at other retailers, notably h.h. gregg and RadioShack (forgotten but not yet gone), both of which have filed for bankruptcy. (Pictured: Radio Shack storefront in Bethesda, Md., on May 14; photo by Gary Arlen)

At the same time, TWICE magazine, in its annual Top 100 Retailers issue, concluded that "Most A/V-based dealers are still reeling from the commoditization of TV." Indeed, the only big winner among the magazine's Top 10 was Amazon, which showed a year-over-year consumer electronics sales increase of 25.4%, retaining its No. 2 position behind Best Buy, which had an overall 0.8% CE sales increase. Other large national retailers in the category included Walmart (down 5%), Apple stores (-3.6%) and Target (-6.5%). TWICE, an MCN cousin publication, covers the consumer electronics retail business.

Those retail trends are reminders of the connections that are reshaping the entertainment/technology landscape.

Separately, Digital Entertainment Group revealed its latest analysis early this month, showing that U.S. subscription video-on-demand revenue has exceeded DVD sales and rentals for the first time. DEG expects that SVOD and other digital delivery systems will soon constitute the largest share of the home entertainment budget. The study found a steep decline in the purchase and rental of entertainment content from 2015 to 2017 (purchases from 44% to 37% and rentals from 30% to 24%) while SVOD has boomed from 26% to 38% in the past two years.

Collectively these developments confirm several realities: Tangible media and brick-mortar stores are fading as digital delivery (including online merchandising) ascend. That's been a 15-year trend, and it rearranges the digital entertainment playing field in a way that offers challenges and opportunities to broadband companies -- especially ones that are looking toward the next realities.

For example: the imminence of VR and AR as part of the evolving video ecosystem.

At the Google i/o developers conference this month, Google offered more details about how it will bring augmented reality capabilities to browsers, especially on mobile devices. Observers quickly tied those features to retailing, such as allowing a person shopping for furniture to use the mobile app to scan a room digitally (with the device's camera) to determine the proper size before placing an online order via Amazon.

As in "Amazon, the go-to preference for all kinds of products" -- not just digital content.

Factor this creeping entry of VR and AR into the entertainment arena, and it's easy to perceive the overhaul taking shape in retail reality -- and the looming competition from digital-first providers such as Google and Amazon as they open yet another front in the pocket-book/attention economy. Major retailers -- which at various times had been considered "coopitition" for broadband carriers -- now have their primary relationships with wireless broadband providers. They (and their virtual storefronts) sell mobile devices and services, including the tools that enable VR and AR.

Moreover, as live TV streaming, a core feature of some competitive skinny bundles, becomes a larger factor in the mobile (and wired) online ecosystem, retailers also have opportunities to insert themselves into that business, and not just smart TVs and digital receivers, but all kinds of viewing devices. It's a way of making up for the lost business in sales of DVDs and other physical media, which they have been abandoning for several years anyway.

Collectively, the retail and video viewing migration plus the rapid VR/AR developments are reminders of the rearranged ecosystem in which carriers will operate. The reality is that viewers will still have to buy their hardware somewhere, but it may not be from retailers as we knew them.

Hence, everyone is trying to figure out how the new augmented and virtual realities play into this altered verisimilitude.

Total home entertainment spending surpassed $12.73 billion during the first nine months of 2015, representing a scant 0.37% increase from the same period last year. 

The category was overwhelmingly driven by paid subscription streaming services, which generated $3.65 billion in sales from January through September, up 24.2% from 2014, according to the Digital Entertainment Group, a Hollywood marketing and promotional organization originally formed to support DVD, Blu-ray, UltraViolet and similar physical media formats.

In its interim report for 2015, DEG said DVD and Blu-ray purchases have declined by 14% year-over-year, while electronic sell-through grew by 18% during the first nine months of the year. The DEG report marks a virtual death notice for conventional video rental, with every category (brick-and-mortar store rentals, subscriptions, even kiosk rentals) seeing declines. For the record, video-store rentals registered just $138 million during the third quarter of this year.

DEG noted that theatrical box office receipts dropped by nearly 13% during the summer quarter compared with year-earlier numbers. Overall, during the first nine months of 2015, box office ticket sales were down nearly 6%, DEG said.

Although DEG did not analyze the impact of falling theatrical box office sales, such numbers are a harbinger of the movies in the pipeline for the months ahead. Not incidentally, that also means new opportunities for original video programming and non-theatrical shows.

DEG's core membership consists of studios' home-video divisions, along with technology suppliers. In recent years, Comcast, DirecTV, Home Box Office, Google and Intel have joined DEG's leadership as the group recognizes viewers' migration away from DEG's original  shrink-wrapped focus.

In its analysis of the spending trends, DEG cited analyst Colin Dixon of nScreen Media, who predicts that in 2016, subscription video-on-demand spending will exceed rental spending for the first time.  Dixon also contends that the tilt to SVOD has probably already occurred since DEG does not include Amazon Prime subscribers in its totals.

Separately, in its third-quarter analysis, DEG cited the growing adoption of 4K Ultra High-Definition TV, which it tied to the continuing appeal of Blu-ray playback devices: 80 million units are now in place in the U.S.

DEG also noted that UltraViolet continues to grow worldwide, with nearly 25 million UV household accounts and more than 50 million movies and TV shows stored in UV libraries.