The Digitization of Home Entertainment

With estimates from the Entertainment Marketing Letter that the cost for a night out for a family of four rose 2 percent in 2002 to $165.20, it’s no wonder that U.S. households are relying on their PCs and home theaters for recreation. In fact, according to Parks Associates, one-third of all U.S. Internet households have a PC located in the same room as their primary home entertainment system, creating spaces for convergence.

“While it is widely acknowledged that a growing number of Internet subscribers have a PC located in the same room as their primary TV or home entertainment system, it is not so well known that these PCs are themselves equipped with numerous entertainment-specific features,” says Michael Greeson, senior analyst and director of broadband research for Parks Associates.

While growing numbers of home computers have the capability of providing music and video entertainment, Internet users are not spending all their online time on sites devoted to those interests. With the exception of MusicMatch Jukebox, Internet users are spending smaller amounts of time at video/movie and music sites, compared to finance sites.

Top Sites, February 2003, At-Home
Finance Sites Unique Audience Total Time Spent
MSN Money 6,136,000 0:39:19
Paypal 5,614,000 0:24:13 5,434,000 0:55:02
Yahoo Finance 4,391,000 0:29:09
AOL Personal Finance 4,245,000 0:15:28
Bank of America 3,931,000 0:49:43 3,781,000 0:10:33
Capital One 3,762,000 0:21:19
Wells Fargo 3,316,000 0:31:08
Citibank 3,315,000 0:20:47
Videos/Movies Sites Unique Audience Total Time Spent
Yahoo Movies 3,349,000 0:04:49 2,708,000 0:11:19
Moviefone 2,698,000 0:06:01
Internet Movie Database 2,470,000 0:18:05
UGO Film/TV 1,716,000 0:08:10 962,000 0:05:43 892,000 0:05:14
Movie 877,000 0:04:50
iFILM 852,000 0:07:27 846,000 0:01:46
Music Sites Unique Audience Total Time Spent
AOL Music Channel 9,162,000 0:14:33
MusicMatch Jukebox 6,763,000 0:45:59
LAUNCH 5,044,000 0:19:44
MTV Networks Music 3,024,000 0:12:16
Sony Music 2,622,000 0:07:03
VUNet USA Music & Media 2,419,000 0:07:36 2,101,000 0:03:23
BMG Music Service 1,935,000 0:10:35
Warner Music Group 1,609,000 0:03:41 1,415,000 0:05:26
Source: Nielsen//NetRatings

DVDs may be the medium where PCs and home entertainment converge. Research from the Video Software Dealers Association (VSDA), indicates a digitization in the home entertainment market, with DVD rental revenues overtaking VHS rental revenues for the first time. According to the VSDA, DVD rentals generated $80 million in revenue, and VHS rentals yielded $78 million for the week ending March 16, 2003.

These figures are the culmination of a record-breaking year for DVD rentals – revenues reached an all-time high of $2.9 billion in 2002, reflecting a 106 percent or $1.5 billion increase from $1.4 billion in 2001.

According to Jupiter Research (a unit of this site’s corporate parent), the simple playback functionality has caused the shift in home entertainment from TVs to PCs, and digital rights and ownership will become one of the primary forces driving adoption of next-generation DVD devices, primarily recordable ones.

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