Photo Credit: Cameron Bunney
Strong consumer demand for physical media—including vinyl, CD, DVD, and Blu-ray—continues to trend upward and remains the primary growth driver for media company Alliance Entertainment.
After two decades of digital dominance, consumers are yearning for physical packaged media, and it’s grown well beyond the vinyl resurgence. Strong consumer demand for physical media remained the primary growth driver for entertainment media company Alliance Entertainment in its latest quarterly earnings report.
CEO Jeff Walker revealed that Alliance Entertainment is conducting a 14-store test with Best Buy, featuring vinyl records and CDs. Walker anticipates that the test will succeed and says it could expand to between 100 and 300 stores in 2027.
“Physical music, movies, and collectibles all grew,” said Walker. “For a long time, so much of the conversation was about streaming replacing physical formats. But what we’ve seen consistently is that fans who can listen to an album or watch a movie online still want something special they can own and collect.”
Physical movie revenue increased by 20% to $101.1 million, aided by relationships with Paramount and Amazon MGM Studios, which contributed new releases, broader title availability, and expanded retail distribution.
Vinyl revenue increased 14% to $86.7 million, while CD revenue grew 22% to $41.2 million, reflecting renewed collector interest in boxed sets, catalog reissues, and import editions. Both categories experienced higher unit sales and average selling prices, and new releases, reissues, and special editions contributed significantly.
“The entertainment industry is increasingly recognizing the value of these highly engaged customers—the superfans—and the growing demand for physical products that we’ve been seeing for years,” Walker added.
Collectibles generated $11.9 million, up from $6.4 million, driven by licensed merchandise, proprietary IP, and integrated retail displays paired with packaged media releases. Distribution and fulfillment fee revenue increased to $5.7 million, up from $4.8 million, reflecting higher demand for the company’s distribution, fulfillment, and value-added logistics services.
Alliance Entertainment reported a 10% increase in fiscal first-quarter revenue as sales of physical movies, music, and collectibles increased. However, higher operating expenses limited growth in the company’s operating income.
Revenue hit $278.8 million, up from $254 million the year prior. Net income increased by 56% to $7.6 million, aided by lower financing costs and a favorable change to the value of warrant liabilities.
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