Long story short, I looked everywhere for this obscure film. Netflix did not have it. Redbox did not have it. My girlfriend was calling every Blockbuster in a ten mile radius and they did not have it! I spent about 45 minutes on this fruitless pursuit.

Eventually, I realized I could probably just download a digital version online. Of course I could! I didn’t even know you could download a movie from Amazon, but you can, and I did. And what a piece of garbage it was (which has nothing to do with this story)!

The point is, resources are getting ever more expensive and physical retailers (in my opinion) have become more and more disappointing (they never have what we’re looking for). Randomly searching for something can waste a lot of gasoline, time, and energy. Why not just turn on the computer, and download what you want.

NPD Group monitors trends in rentals and guess what they found out? That’s right, people don’t like to drive to Blockbuster! In fact, more people rent from Redbox, probably because it’s closer (in most cases) and it’s cheaper (come on folks, $1 versus $5). Less surprising is that even more people simply just download their movies.

Senior vice president and industry analysis for The NPD Group Russ Crupnick had this to say about the trend:

“The movie-rental market is clearly undergoing a sea change, as consumers become better equipped to access on-demand and streamed movies and are more comfortable with available delivery options”

But old habits die hard and the movie rental business has not completely transformed. 37% of rentals go to Redbox, 31% go to digital and streaming formats, and the remainder go to physical retailers (like Blockbuster). I’m sure this will continue to change as consumers become more comfortable renting online.

NPD data was released today that cemented Microsoft’s position as the leader of 2011 in video game sales. That $6.7 billion worth of sales equated to Microsoft’s sales accounting for 40 percent of all video game sales in 2011.

The entire industry made between $16.3 and $16.6 billion in 2011. This includes both retail and digital game and hardware sales. The sales are down 2 percent when compared to 2010.

New physical content at retail still accounts for the majority of video game sales. Retail generated about $9.3 billion, an 8 percent decrease from last year.

HD console software sales were up 9 percent in 2011. Used games, full-game digital downloads, downloadable content and mobile gaming app sales were up as well.

“Overall industry results are not entirely surprising given that we are on the back end of the current console lifecycle, combined with the continued digital evolution of gaming. Core gamers continue to be engaged and spend on established franchises across both the digital and physical format using multiple devices for different gaming occasions,” Anita Frazier, industry analyst, The NPD Group, said.

This ties into December seeing only 6.3 million console sales, down from 8.4 million a year ago. This is the lowest level since 2005 which was at the end of the previous console cycle. These are usually the signs of a new console cycle starting up soon.

December was the main factor that brought the year’s sales down. December is typically a strong month for software and console sales, but the NPD notes that sales were down across most software and hardware that month. In fact, the only two platforms to see an increase in sales in December were the DS and 3DS.

The top 10 best-selling games in December were:

1. Call of Duty: Modern Warfare 3 (360, PS3, Wii, PC)
2. Just Dance 3 (Wii, 360, PS3)
3. Elder Scrolls V: Skyrim (360, PS3, PC)
4. Mario Kart 7 (3DS)
5. Battlefield 3 (360, PS3, PC)
6. Madden NFL 12 (360, PS3, Wii, PSP, PS2)
7. Assassin’s Creed: Revelations (360, PS3, PC)
8. NBA 2K12 (360, PS3, Wii, PSP, PS2, PC)
9. Super Mario 3D Land (3DS)
10. Batman: Arkham City (360, PS3, PC)

The top 10 best-selling games of 2011 were:

1. Call of Duty: Modern Warfare 3 (360, PS3, Wii, PC)
2. Just Dance 3 (Wii, 360, PS3)
3. Elder Scrolls V: Skyrim (360, PS3, PC)
4. Battlefield 3 (360, PS3, PC)
5. Madden NFL 12 (360, PS3, Wii, PSP, PS2)
6. Call of Duty: Black Ops (360, PS3, Wii, NDS, PC)
7. Batman: Arkham City (360, PS3, PC)
8. Gears of War 3 (360)
9. Just Dance 2 (Wii)
10. Assassin’s Creed: Revelations (360, PS3, PC)

The December and annual sales, even though they are down, represent the fact that gaming is a huge industry that continues to strive. With the increase in mobile gaming and the proliferation of digital sales, it can only get better.

Also, with new hardware like the PlayStation Vita and Wii U launching this year, there should be some good news and sales for video games in 2012.

But research published today by the folks at NPD Group suggests a decline in P2P music downloading since the demise of Limewire. According to NPD, Americans downloaded music via P2P client at a 16% clip in Q4 of 2007. In Q4 of 2010, when Limewire went down, that number had fallen to 9%. More statistics from the study:

The average number of music files downloaded from P2P networks also declined from 35 tracks per person in Q4 2007 to just 18 tracks in Q4 2010, although some downloaded just one or two tracks, while others took hundreds. NPD estimates there were 16 million P2P users downloading music in Q4 2010, which is 12 million fewer than in Q4 2007.

“Limewire was so popular for music file trading, and for so long, that its closure has had a powerful and immediate effect on the number of people downloading music files from peer-to-peer services and curtailed the amount being swapped,” said Russ Crupnick, entertainment industry analyst for NPD. “In the past, we’ve noted that hard-core peer-to-peer users would quickly move to other Web sites that offered illegal music file sharing. It will be interesting to see if services like Frostwire and Bittorrent take up the slack left by Limewire, or if peer-to-peer music downloaders instead move on to other modes of acquiring or listening to music.

Yeah, I’m going to go with the find other means option.

After the fall of Limewire, NPR reports an 11% rise in Frostwire use and a 4% rise in uTorrent use. These numbers seem low, especially the uTorrent rise. It might be helpful to note the information was gathered through online surveys. I’m not saying people lie, but people lie. With private tracker torrent sites like waffles.fm and what.cd popping up, people are going to feel more secure in using torrents to download music. (If you can score an invite to one of those sites)

Even with record companies suing for laughable amounts like $75 trillion, for some people that have been freely acquiring all their music since the early days of Napster, it could prove to be an impossible habit to break.

Screens, to be exact.  That was the factor in NPD’s latest mobile research.  They found that while the market share for phones with 3.5 to 3.9 inch screens has remained steady, phones with 4 inch screens and beyond have snatched market share from smaller phones with a screen size of less that 3.5 inches.  Practically, that means iPhone sales are constant and EVO and Droid sales are on the rise.

Here is the breakdown from NPD:

Smartphones with 4-inch-or-larger screens, like Samsung’s Galaxy S, HTC’s EVO 4G and Motorola’s Droid X, which debuted in the second quarter (Q2) of 2010, quickly grew to encompass 24 percent of the market by Q4 2010. The market share for iPhones and other smartphones with screen sizes between 3.5 inches and 3.9 inches increased 2 percent over the prior year’s Q4; while the market share of smartphones with screens smaller than 3.4 inches, declined from 63 percent in Q4 2009 to just 36 percent of the smartphone market in Q4 2010.

In ranking the top selling phones with 4 inch screens, the HTC EVO and Droid X took gold and silver, respectively.  Three different Samsung models rounded out the top 5.

It’s obvious that the functions of everyone’s phone have expanded, and this has something to do with large screen popularity.  People simply weren’t watching YouTube videos on the Motorola SLVR.  Plus, more people are accessing social media sites from their phones, and are apparently more satisfied when they do so.  It does show that people care less about having a bulkier phone in their pocket.  “Larger displays offer a richer media experience, as well as a roomier surface for on-screen keyboards. Handset vendors are continuing to push the envelope of pocket real estate to complement the video capabilities of 4G handsets,” said executive director of analysis Ross Rubin.

NPD added an interesting tidbit to their report: While guys still buy more large screen smartphones, ladies, you are also increasingly more likely to but a large screen phone.  Female share of the market rose from 30% to 40% during the last two quarters of 2010.

The study noted that digital video in its entirety only accounts for a quarter of all home video, noting that DVDs and Blu-ray still have a firm grasp on the habits of Americans. “Overwhelmingly digital movie buyers do not believe physical discs are out of fashion, but their digital transactions were motivated by the immediate access and ease of acquisition provided by streaming and downloading digital video files,” said NPD analyst Russ Crupnick.

The study also asked people about why they prefer certain types of digital services. Many consumers noted that a pay-per-movie service like iTunes might “have the ‘most current releases available,’” but a subscription service like Netflix has “the best ‘overall shopping experience’ and ‘value for price paid.’”

These figures seem to come at no surprise to stock market insiders. Goldman Sachs analyst Ingrid Chung said today that Netflix is a “screaming buy.” And just last week BusinessInsider reported analyst Nat Schindler as saying, “Netflix’s huge increase in content has created a very high competitive barrier and with Netflix already a low cost service, we see few opportunities for an emerging competitor to pose a serious threat.”

Netflix’s grip on the market seems to be firm and growing tighter. Is there any way for competitors to realistically challenge Netflix’s dominance? Let us know what you think.

"There’s an ongoing misperception that certain Web activities are the exclusive domain of young people," said Russ Crupnick, entertainment industry analyst for The NPD Group. "That misperception could cost the entertainment industry, in terms of lost opportunities to target valuable consumers."

NPD’s "Entertainment Trends in America" tracking study found that more than half of all Internet users (57%) visited a social network in the past three months. While younger Internet users (13 to 34) are more likely to visit social networking sites and visit them frequently, baby boomers visited social networking sites an average of 8 times over the last three months.

The study found that baby boomers who participate in activities like social networking or video streaming, are more likely to buy DVDs,CDs and go to the movies. On average baby boomers who stream video are 15 percent more likely to buy a CD, DVD, or movie tickets.

"As more consumers of all ages spend more time online, there’s potentially going to be less time for them to consume entertainment content in traditional ways," Crupnick said.

"These findings underscore the growing need for entertainment companies to promote and distribute digital entertainment content online, in order to keep pace with the changing needs and desires of consumers of all ages."

Sales of video game hardware, software and accessories reached $1.19 billion in July, with software sales increasing 41 percent and hardware sales growing 17 percent.

Aided by a number of popular titles, the video game industry has remained strong during a sluggish economy that has affected other industries.  A Nintendo spokesperson said the company has not seen an impact from less consumer spending.

Sony’s PlayStation 3 outsold Microsoft’s Xbox 360 game console in July, selling 224,900 PS3s compared to 204,000 Xbox 360 consoles. The Wii sold more than both systems combined, totaling 555,000 units sold during the month.

Among portables, Nintendo’s DS sold 608,400 units in July, while Sony’s PlayStation Portable sold 221,700 units.

The most popular game in July was Electronic Art’s "NCAA Football 09," which was released during the month. It sold close to 400,000 units in the United States.

Nintendo’s "Wii Fit" exercise game was close behind, selling 369,600 units.

Activision Blizzard’s "Guitar Hero" game for the Nintendo DS, Nintendo’s "Wii Play" and EA’s "NCAA Football 09" for the PS3 were in the top five of best selling games.

46% of respondents to NPD’s survey thought they would spend about the same amount in 2008 as in the prior year. Teens were the only age group where spending tipped positive; 30% believed they would spend more than last year, versus 25% who thought they would spend less.

Mix in more indie releases than ever, an increasingly confusing and fractured media landscape and a summer touring season dominated by aging superstars demanding high priced tickets and the short term industry outlook appears bleak.

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