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Home video numbers are up, but little reward for Netflix

Hollywood is a long way from returning to the days when consumers were paying $30 for a DVD and spending $4 to rent a single title. Still, digital revenue is showing some positive signs.

The good ol' days for Hollywood are gone, but Netflix and Coinstar are likely behind some modest gains for home video.
Greg Sandoval/CNET

Make it a Blockbuster night.

Remember that? It wasn't that long ago that Blockbuster was king of home video and the company's name was synonymous with weekend entertainment for millions of Americans. But the original Blockbuster business is dead now. Netflix and Coinstar (Redbox) rule supreme and Hollywood's home entertainment business is in the toilet.

Against that dismal backdrop, the studios are excited about a 1 percent uptick for the first half of the year in U.S. home-video sales, according to the Digital Entertainment Group. DEG said total revenue came in at $8.4 billion, while digital sales recorded the biggest increase, rising by 84 percent to $2.4 billion.

Compare that $2.4 billion with the $329 million pittance that DEG said was generated by electronic sell-through, the term used by the studios to describe the money from individual rentals and sales of films. The numbers make it pretty obvious that Netflix and the company's popular subscription business model is helping to drive much the increase in home-video revenue.

Netflix is the dominant player right now in home video with subscription services from Hulu and Amazon far behind. Perhaps, if Netflix can continue to add subscribers, something -- it has struggled with of late -- the company will grab a critical mass of consumers and that might hand CEO Reed Hastings more leverage when negotiating with the film studios.

Read "Netflix's lost year: The inside story of the price-hike train wreck.

One of Netflix's biggest drawbacks is that the company's streaming service no longer offers much in the way of recently released films. Of the six top Hollywood studios, only Paramount still offers relatively new films via Netflix.

Netflix certainly isn't being rewarded much for helping to drive new money into the sector.

Investors punished Netflix's stock last week after the company said that it might see lighter subscriber growth than expected and possibly report a loss in the fourth quarter. Netflix shares fell more than 25 percent following the news and was down 3 percent to $56.89 in morning trading.