Blu-ray Disc spending is up more than 10% and overall consumer spending on home entertainment is down 5%, despite a 16% drop in box-office for titles that entered the home entertainment window in the first half of 2011, according to the latest figures released by the Digital Entertainment Group.

DEG says the result is notable because comparisons to last year’s sales are so highly skewed by the April 2010 release of Twentieth Century Fox Home Entertainment’s Avatar, Hollywood’s all-time box-office hit. In the second quarter of 2010 alone, Avatar sold more than 12 million discs.

While Avatar’s phenomenal success a year ago makes for tough comparisons, the underlying numbers in the latest quarter showed encouraging signs. Among the trends DEG highlights:

– Higher margin products like Blu-ray, electronic sell-through and VOD are all in growth modes, with spending on Blu-ray up more than 10%, electronic sell-through up 4%, and VOD up 4% over the same period last year. In total, digital transactions were up more than 5% over a year earlier.

– While first quarter 2011 home entertainment spending was down 6.4%, second quarter spending was down only 3.6% - impressive improvement considering the absence of Avatar, and a further indication of stabilization.

– Meanwhile, with many Blu-ray players now affordably priced at or below $100 and built for versatility so that they play existing DVDs and stream content, more homes than ever are now Blu-ray ready.

– In the second quarter, the number of Blu-ray homes grew 16% over 2010 (inclusive of BD settops, PS3s and HTiBs,) bringing the total household penetration of all Blu-ray-compatible devices to more than 31.6 million US homes.

– Further, 4.7 million HDTVs were sold to US consumers in the second quarter 2011. While flat over the first half last of the year, HDTV penetration to date is now at more than 66.8 million US households.

With the large slate of theatrical blockbusters coming to home entertainment in the third and fourth quarters, including Transformers: Dark of the Moon, Harry Potter and the Deathly Hallows: Part 2, The Hangover Part II, Pirates of the Caribbean: On Stranger Tides, and Fast Five, DEG is “extremely optimistic” about the second half of the year.

Story filed 11.08.11