AP/ January 8, 2013, 2:12 PM

Hollywood offers free movies to reel in consumers

David McNew/Getty Images

LAS VEGAS In a bid to jumpstart its fledgling online entertainment system, Hollywood studios are resorting to a time-honored tactic: giving stuff away.

An industry consortium called the Digital Entertainment Group said Tuesday that it will include 10 free movies from six major studios every time a consumer buys certain models of Internet-connected TVs. Buyers of certain Blu-ray players will get five free movies.

The movies will be stored online through a system called UltraViolet, and are redeemable through Web video services CinemaNow, Flixster, Nook Video and Vudu.

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The giveaway launches later this year and includes movies from Lionsgate (LGF), Paramount, Sony (SNE), Universal and Warner Bros.

Electronics makers supporting the promotion include LG, Panasonic (PC), Philips (PHG), Samsung, Sony, Toshiba and Vizio.

The giveaway, announced at the International CES show, illustrates the lengths that the movie studios have to go to adapt to consumers' changing viewing habits. The DEG also announced Tuesday that U.S. home entertainment spending was flat in 2012 at $18 billion.

The end-of-year figures showed that revenue from purchases of physical discs fell 5.5 percent to $8.5 billion, as Blu-ray disc sales rose 10 percent and DVDs continued their steady decline.

The major growing categories were kiosk disc rentals, which rose 16 percent to $1.9 billion. Subscription streaming jumped 46 percent to $2.3 billion. Video-on-demand rentals grew 11 percent to $2 billion and digital download sales rose 35 percent to $811 million.

These growing categories helped the decline in overall spending to stop a multi-year slide. U.S home video spending fell 3 percent in 2010 and declined 2 percent in 2011.