According to the latest research from Strategy Analytics, the global home video market is poised to see further declines in the years ahead. Apparently, even the adoption of Blu-ray by mainstream consumers does not drive the market upwards, the analysts believe. As a result, studios will need to help develop ways of digital delivery.

“We believe the Hollywood studios now need to increase their focus and resource allocation to digital distribution as fast as possible, or face the consequences of a stagnating market in the coming years,” said Martin Olausson, director of digital media research at Strategy Analytics.

Global revenue from sales of DVDs and Blu-ray discs (BDs) declined more than 4% in 2009, to $35.7 billion, and is set for another 2% drop in 2010. At the same time digital distribution channels for home video entertainment are not developing fast enough to offset the decline in packaged media formats. The total packaged media market, including both retail and rental of DVDs and Blu-Ray, is projected to decline 3% in 2010, to $53.3 billion and by 12.6%, to $48.1 billion by 2013.

“The future of the home entertainment market is within digital distribution of home video,” added Martin Olausson.

According to Strategy Analytics, the lack of advanced digital distribution services also slows down consumption of new movies as well, therefore, development of such services is crucial for movie companies.

“This stagnation in the home video market is principally supply-side driven. Our advanced user experience research on early adopters of digital media services, undertaken by our Digital Home Observatory service, suggests that early adopters are almost universally consuming more content now than they did before they started using digital media services,” added Kevin Nolan, vice president of user experience research at Strategy Analytics.

Tags: Blu-ray, HDTV