Digital Entertainment GroupThe Digital Entertainment Group posted its third quarter numbers and digital distribution was up 23 percent, and accounted for an all time high of 13.5 percent of consumer spending on home media. The rise in digital distribution wasn't enough to hold the rest of the home media market flat though as it continued its 2010 slide by 8 percent in the first three quarters of the year -- which is something considering the first six months were only off 3.3 percent. Even with the third quarter decline, Blu-ray is still up 80 percent on the year when compared to the same period in 2009, which amounts to a cool billion in total. This dwarfs electronic sellthrough (mostly iTunes) at $432 million, which is a 37 percent increase over the first nine months of 2009. This was enough to keep DEG's pres' Ron Sander optimistic stating "While we continue to encounter tough market conditions, there are a number of positive trends emerging, particularly in some of the industry's key growth areas ... Blu-ray continues to show strong growth in every category, new release packaged media sellthrough is up, and digital distribution is gaining significant momentum as we move into the fourth quarter." Making less than last year is never fun, but all things considered, it's hard to complain about only making $6.5 billion (that's with a B).
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BLU-RAY HARDWARE AND SOFTWARE SALES CONTINUE TO SOAR
AS DIGITAL DISTRIBUTION BOOSTS
SELL-THROUGH REVENUE

Blu-ray Software Sales Up 80 Percent to $1 Billion
Blu-ray Set-Top Sales Up 104 Percent
Digital Dis tribution Up 23 Percent


LOS ANGELES (October 21, 2010) – DEG: The Digital Entertainment Group released year-to-date
U.S. sales figures for the home entertainment industry today. Consumer spending for the first three
quarters of 2010 in the home entertainment window for pre-recorded entertainment, which includes
DVD, Blu-ray Disc and digital distribution, reached $12.6 billion, off four percent compared to the
same period last year. Consumer transactions for home entertainment products were flat for the
year.

Blu-ray Disc continued to make significant contributions into the third quarter, with sell-through up 80
percent to $1 billion year-to-date. Packaged media sell-through, which includes DVD and Blu-ray
Disc, declined eight percent year-to-date. However, the considerable growth of electronic sell-
through helped offset this decline, bringing overall sell-through up two percentage points, off just six
percent year-to-date.

Digital distribution, which includes electronic sell-through (EST) and video-on-demand (VOD), is
firmly established, having made up 13.5 percent of the overall consumer spend in home
entertainment year-to-date. EST climbed 37 percent to $432 million and VOD was up 20 percent to
$1.2 billion year-to-date, a combined growth of 23 percent to $1.7 billion.

Blu-ray hardware sales continued to climb in the first three quarters of the year as well, selling more
than three million set-top units, an increase of 104 percent over the same period last year. This
brings the total installed base of Blu-ray Disc playback devices in the U.S. to 21.1 million units.

"While we continue to encounter tough market conditions, there are a number of positive trends
emerging, particularly in some of the industry's key growth areas," said Ron Sanders, President,
DEG and President, Warner Home Video. "Blu-ray continues to show strong growth in every
category, new release packaged media sell-through is up, and digital distribution is gaining
significant momentum as we move into the fourth quarter."

According to Rentrak Corporation's Home Video Essentials, rental spending was down 4.4 percent
to $4.4 billion year-to-date, with DVD and Blu-ray kiosk revenue up 55 percent and Blu-ray rental
spending up 40 percent.

The DEG compiles quarterly sales data for various products within the home entertainment category,
including Blu-ray, DVD and HDTV. The industry association compiles its data based on input from
member companies, retailers and industry association tracking sources.

BLU-RAY DISC SEES SIGNIFICANT GROWTH
Blu-ray Discs shipped to retail in the first three quarters of 2010 topped 98 million, up 57 percent
over the comparable period in 2009, according to figures compiled by Swicker & Associates on
behalf of the DEG. Household penetration of Blu-ray Disc compatible devices, including set-top
players and PlayStation 3 consoles, has now reached 21.1 million U.S. homes.

HDTV SALES EXPERIENCE MORE GROWTH
According to figures compiled by the DEG based on data from CEA, retailers and manufacturers,
some 12.7 million HDTVs have sold year-to-date. U.S. household penetration is at approximately 53
million.

DVD PLAYER SALES REACH 289 MILLION
According to figures compiled by the DEG based on data from CEA, retailers and manufacturers, 14
million DVD players sold to U.S. consumers year-to-date.

Since launch in spring 1997, some 289 million DVD players, including set-top and portable DVD
players, Home-Theater-in-a-Box systems, TV/DVD and DVD/VCR combination players, have sold to
consumers, bringing the number of DVD households to approximately 91 million (adjusting for
households with more than one player). The DEG estimates that some 68 percent of DVD owners
have more than one player.