By Ryan Nakashima, AP Business Writer
LOS ANGELES (AP) — Americans' spending on home videos has finally emerged from the recession — helped by more purchases of higher-priced Blu-ray discs and greater outlays on cut-rate rentals from Netflix and Redbox.
For the three months through September, home movie spending rose nearly 5% from a year earlier to $3.9 billion, the first increase since early 2008, according to industry organization, The Digital Entertainment Group.
Buying digital copies of movies and ordering them from set-top box video-on-demand services also rose.
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People bought fewer DVDs and made fewer trips to brick-and-mortar video rental stores, cutting into the gains.
For the year overall spending is down about 2% at $12.3 billion.
The industry is struggling to cope with a weak economic recovery and the gradual wane of the DVD era. The digital discs, once revolutionary for their clarity and durability, were shown the exit once Blu-ray became the industry's high-definition standard in 2008. Compared to a year ago, DVD sales dropped by 15%, or about $230 million, to $1.32 billion.
Blu-ray disc sales rose by about $156 million, to $423 million. That didn't make up for the DVD drop, even with the help of the popular re-release of the six "Star Wars" movies on Blu-ray, which racked up $38 million in North America in its first week of sales in late September.
There's still room for Blu-ray to grow. Although Blu-ray player households rose by 52% to 33.5 million, that's still only about a third of the TV-owning homes in the U.S.
Brick-and-mortar store rentals fell by $142 million to $353 million, but they were more than replaced by a $152 million gain in new delivery methods, such as online streaming, video-on-demand, mail-order subscriptions and cheap rentals from kiosks. Revenue from those rental methods rose to $1.70 billion. Kiosk rentals made up more than half of those gains.
Netflix Inc.'s price hike to customers on Sept. 1 may have bolstered the numbers, and Redbox said it was raising its nightly DVD rental fee to $1.20 from $1, which will likely add to the current quarter's totals.
The smallest segment remains digital purchases of movies, which rose by about $15 million to $136 million. Movie studios have been concerned that people aren't purchasing digital movies because they are worried the files won't be easily transferable to various devices, a concern it hopes to ease with its UltraViolet view-anywhere standard, which Warner Bros. launched this month.
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