The huge haul of home entertainment dollars that’s washed into Hollywood during the pandemic set another record in the first half of 2021, according to new figures from industry organization Digital Entertainment Group. And that record $15.7 billion doesn’t even include as much as $1 billion in premium VOD revenues that studios aren’t reporting publicly, a top studio executive said. 

DEG’s mid-year gathering this week unveiled the industry’s latest collective revenues for subscription video streaming as well as sales and rentals of digital and physical copies of movies and TV series, said Judith McCourt, the analyst who compiles that data for the DEG. The numbers set a record, up 5.2 percent to $15.7 billion on top of last year’s pandemic-fueled explosion of consumer demand, and up 32 percent compared to 2019. Streaming revenues dominated the totals, while other distribution channels generated about $2 billion in additional income.

Even without those PVOD contributions, the numbers show just about every corner of the sector has benefitted, said McCourt. Her figures also don’t include ad revenues generated by free streaming services such as Tubi, Roku TV, IMDb TV, Xumo, and Pluto. 

“What happened with the pandemic, it really has had a sustained effect,” McCourt said. “We’re seeing growth on top that (record 2020). Going back to 2019, the growth is even more extraordinary.”

But the DEG numbers don’t include one controversial, and potentially quite big, new window: films available online roughly at the same time they hit theaters, what the industry calls premium video on demand and so-called early access electronic sell-through, said Michael Bonner, president of Comcast-owned Universal Home Entertainment.

“Those numbers aren’t included. Our estimate is there’s a billion dollars of consumer spend not captured in the numbers you’re presenting,” said Bonner, a DEG board member who was providing commentary on the numbers during the event. 

Bonner didn’t expand on his comment, but it marks one of the first times a senior studio executive has ventured an estimate of PVOD’s value. The entire early-access sale and rental business was created, pretty much on the fly, in the pandemic’s early days, as studios tried to salvage expensive movies whose theatrical runs had been interrupted by the virus. 

Since then, studios have each settled into different PVOD models, including WarnerMedia’s free day-and-date releases in theaters and on HBO Max for its entire 2021 slate. Jim Wuthrich, WarnerMedia’s president of home entertainment content and licensing and the DEG board chairman, said it’s still too early to say definitively whether PVOD is cannibalizing some corners of his business, as theater owners claim, or driving overall higher revenues. 

“The jury is still out on what it does to the life cycle of any individual film,” Wuthrich said. “We now have six or seven titles (to look at), fewer than that which have gone through the whole (home-entertainment release) cycle. We think it’s increasing viewership overall, because they can see it anywhere at any time. We think that will grow the overall business. It does have an impact on the transactional business, but we often have repeat customers; close to 50 percent had said they previously watched the movie before acquiring it.”

Black Widow star Scarlet Johansson filed suit last month against Disney, three weeks after that movie debuted, claiming the studio had encouraged viewers to use the film’s PVOD rather than go to theaters. That reduced her share of anticipated backend profit participation. 

After the film’s first week, Disney announced that PVOD generated “more than $60 million” from Black Widow. DEG figures show Black Widow remains the cumulatively most watched PVOD film in circulation. The film has grossed $360 million worldwide, a good figure in mid-pandemic, but disastrously inadequate given the economics of typical Marvel blockbusters.

But Wuthrich credited the PVOD releases with encouraging even HBO Max subscribers to find other catalog content they’d like to buy or rent on top of what the service is providing. And just because people are watching the film on PVOD doesn’t mean they aren’t buying a physical or digital copy later. 

“The amount of new customers who’ve come into the space has been really quite tremendous,” Wuthrich said. “And they continue to transact. It’s really quite encouraging. We saw a lot of new customers coming in through premium (VOD), and then they stick around. This isn’t at the detriment of the streaming services. Consumers are adding multiple streaming services, and in addition, they’re continuing to lean into this content space and add (rentals and purchases) from the catalog.” 

More generally, McCourt said consumers who found few new programs to rent or buy kept looking, driving big sales and rentals of back-catalog movies and TV series. For Bonner, the fluid circumstances of the moment have forced a lot of experimentation and testing, but plenty of positives to like. 

“The reality is, we’re all making tradeoffs over how to put product through different consumer offerings earlier than ever,” Bonner said. “Different premium models, SVOD. We’ve learned a tremendous amount in terms of consumer behavior and demand across these windows. Each studio has its own strategy. The consumer engagement is much greater now than it’s ever been, just earlier on the life cycle. Clearly, there are implications and impacts from model to model, but we’re getting more engagement from consumers, and that is a very good thing for entertainment, and it’s working right now not just for one model but for all of them.”

Overall, the figures give a window into an extraordinary time for the once-sleepy Hollywood corner called Home Entertainment. Two decades ago, the business was largely focused on making sure Blockbuster and local retailers had enough copies of hit DVDs on their shelves. Now, the sector’s revenues through numerous channels – including still selling a surprising number of DVDs and Blu-ray Discs – far outstrip the last good year of theatrical exhibition, which topped $11.4 billion in 2019. 

And in fact, 2021’s first half could have been even better, event participants said, but the absence of compelling new movies in theaters meant an absence of compelling new titles on the digital and physical shelves too. Even more, as the economy opened in Q2, audiences kept tuning in, despite spending far more time away their TV sets going to events, traveling, and other once-normal activities. It 

“They still found time to watch,” McCourt said. “It’s really remarkable because there really weren’t many new theatrical products to watch. I think people have rediscovered the value of being at home.”