The Digital Transformation of Home Entertainment

The rise of digital formats has not only transformed the music industry over the past two decades. The home entertainment market has also undergone a complete digital makeover. While the introduction of digital movie downloads via services such as iTunes put a dent in physical format sales and rentals, the rise of Netflix and other subscription-based video streaming services really transformed the marketplace for home entertainment.

In the first half of 2018, streaming accounted for 54 percent of home entertainment spending in the United States according to the Digital Entertainment Group. That's up from just 5.5 percent in 2011. Meanwhile the sale of DVDs, Blu-Rays and other physical formats saw its share of total spending drop from 50 percent in 2011 to 17 percent in the first half of 2018.

The market segment hardest hit by the digital transformation is without a doubt brick-and-mortar rentals though: in the first half of this year, consumers only spent $170 million on movie rentals at physical stores, down from $1.6 billion in 2011. Blockbuster, once upon a time the largest chain of video rental stores in the United States, closed its third and second to last stores in the country this year, leaving one sole survivor in Bend, Oregon.