In what could be a huge tipping point for the UK entertainment market, Britons are set to spend more on video streaming subscriptions and film/TV downloads than on buying and renting DVDs.
Strategy Analytics 7 May 2016According to research firm Strategy Analytics, UK consumers are on target to spend £1.31 billion on streaming and downloading in 2016, up 23.7% on 2015, compared with £956 million on DVDs (including Blu-ray).
If the calculations are realised, it would represent a 16.3% decline in physical format sales, slipping below the £1 billion mark for the first time since 1994. It would also mean that online formats would account for 58% of home video spend, compared with 42% for DVDs, whose share in 2015 was 52%.
Overall, the £2.27 billion that Britons are likely to spend on home video would be a 3% rise on 2015 and the equivalent of £6.63 per household a month. The analyst did note though that video advertising around streamed and downloaded content will rise 23% to £593 million, taking overall revenues for the home video market up 6.6% to £2.86 billion.
Strategy Analytics also split online and DVDs into the five main methods of accessing home video, and found that most spend in 2016 will still go on buying DVDs/Blu-ray, but that will drop 16% to £905 million. By contrast, streaming subscription services, such as Netflix and Amazon Prime Video, follow next and are the fastest-growing format, set to rise 36% to £742 million. The analyst calculated that there are around 4.6 million Netflix households in Britain and 2.5 million with Amazon Prime. Around a fifth of UK households that subscribe to a video streaming service subscribe to at least two.
The numbers show that video streaming subscriptions will be the dominant format from 2017 onwards and will account for over half of consumer home video spend by the end of 2021. Downloading to rent will rise 8% to £338 million in 2016, downloading to buy will rise 16% to £234 million. Spend on renting DVDs will fall 24% to £51 million, or just 2% of the market.
“Five years ago, DVDs represented 86% of consumer spend on home video, in five years it will be less than 14%, with DVD/Blu-ray rental virtually extinct,” commented Strategy Analytics digital media director Michael Goodman. “As online provides increasing ways to access films and box sets, physical simply can’t compete. Although many people will always prefer a physical disc, retailers will have to decide whether it’s even viable to offer that format in five years’ time. Many won’t and with less high street players around, it will be online, ironically, that keeps DVDs on life support via e-commerce.”
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