Report: Made-to-order discs to boost DVD spending by $665m

Consumers will spend $1.1 billion by 2012 buying DVDs manufactured on demand (MOD) in stores and online in the U.S. and Europe, according to a new report to be released tomorrow from research firm Screen Digest.

Almost two-thirds of the spending on MOD, $665 million, will be new revenue, while the remainder will replace traditional DVD spending, according to the report, “On-demand Media: Re-inventing the Retail Business Model.” MOD is also referred to as on-demand media.

Consumers will spend $33 million this year in the U.S. and Europe on discs manufactured-on-demand, Screen Digest predicts. Most of that spending will be online through Amazon.com, which produces DVDs on demand through its CreateSpace subsidiary for CNN, CBS News, Charlie Rose and other suppliers and independent producers.

Screen Digest believes online MOD will grow faster at first because consumers don’t need to make changes in how they shop as MOD titles are marketed online similar to pre-manufactured titles and available in the same timeframe.

MOD in stores will be offered through kiosks and consumers will have to wait about 10 minutes for the discs to be pressed.

Screen Digest predicts that in the next five years, in-store MOD will grow, accounting for half of MOD spending by 2012. Retailers are expected to begin launching pilot tests of kiosks in stores this spring in the U.S.

Screen Digest believes the video business is reaching its saturation point in some markets with only the biggest titles securing shelf space. Researchers, and many in the industry, believe MOD could solve shelf space problems, by allowing retailers to offer a greater number and variety of titles without having to stock all those additional releases on shelves. For suppliers, it could open up a new way to offer more niche, or long tail, releases that are not currently on DVD.

Initially, Screen Digest believes the business will focus on long-tail titles and those not previously available on DVD along with releases with a short shelf life, such as sports highlights. As the market grows, catch-up TV and catalog feature film titles will also be made available through MOD. Because many of the releases offered through MOD aren’t now on DVD, Screen Digest believes a “significant portion” of revenues generated will be incremental.

“Retailers, rights holders and consumers can all benefit from the on-demand retailing of a wide range of video content, and overall the industry has the potential to reap significant financial value from a well-executed ODM strategy,” said Screen Digest analyst and report author Marie Bloomfield. “This is particularly crucial as the growth in the DVD business has plateaued and the new content made available to consumers will generate incremental revenue which will help sustain the market.”