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Internet-connected electronics fueling more rentals, less buying, in home entertainment

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Consumer spending on home entertainment dropped about 4% though the first nine months of 2010 compared with the same period last year, according to data from the BTIG Research firm.

The reason? More people are using consumer electronics items such as Internet-connected televisions and Blu-Ray players to rent entertainment media instead of buying it.

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Such electronics allow consumers to access streaming and rental services such as Netflix, which has bitten into sales of boxed media, the research firm said.

The third quarter of the year saw particularly high declines, the firm said. Sales of disc-based media such as high-definition Blu-Ray disc movies and standard-definition DVDs, as well as digital download purchases, dropped 11% in the third quarter of the year, compared with a 5% drop during the first six months of 2010, BTIG said.

In addition to Netflix, rental kiosks such as Redbox and video on demand from cable and satellite providers are seeing rapid growth, BTIG said. Spending on rentals from kiosks rose 55% over the first nine months of 2010, the firm said.

That too means more rentals and fewer purchases, but also fewer rentals from brick-and-mortar rental stores such as Blockbuster. Brick-and-mortar rental sales were down about 31.4% over the first nine months of 2010, year over year, BTIG said.

Chart: Consumer spending on home entertainment. Credit: BTIG Research.

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