August 13, 2020
New data from the British Association for Screen Entertainment (BASE) and compiled by The Official Charts Company shows that consumer spending on digital movie purchases grew by more than 87% during the coronavirus pandemic lockdown period through June 30 to £113 million ($148 million). The United Kingdom is the second-largest home video market in the world.
Examining the wider transactional VOD market, data from Kantar suggests 1.8 million new customers either bought or rented digital content during lockdown, taking the number of consumers transacting digitally in that period to a record high of 5.5 million.
In the 12 week period from March 28 when the British government introduced its “stay home” policy, digital purchases accounted for 51% of the market as consumers engaged with the depth of range of titles available through digital home viewing options, with 49% attributed to sales of physical media (DVD, Blu-ray Disc and 4K UHD Blu-ray). While growth in digital ownership was already evident, with its share at 29% in the same period in 2019 and at 37% in the 12 weeks prior to lockdown, the data suggests transactional VOD made huge gains at a time when many of consumers were forced to stay home.
Falling disc sales prior to the pandemic translated to an overall decline in the transactional video market, but the performance of digital transactional in lockdown has reversed that trend, with whole video market growth of 6.9% in value terms delivering a significant 21 point swing. During the lockdown period, disc proved to be remarkably resilient even in the context of many bricks and mortar retailers either being forced to close or to pivot to focus on essential provisions. Even with those challenges, with premium formats like Blu-ray and 4K UHD continuing to appeal and an increased engagement from consumers with TV box sets on disc, the disc market maintained a predominantly flat value position year-on-year.
“With nearly 2 million new customers buying or renting entertainment content from a digital store during the lockdown period and contributing to the wider transactional video market returning to growth, the digital transactional market has been a beneficiary of the fact that the government’s Stay Home policy provided the right environment for it to flourish,” BASE CEO Liz Bales said in a statement.
Performance across the market can to some extent be attributed to a strong release slate, with a pipeline of theatrical titles becoming available early for purchase on digital platforms. During the lockdown period titles such as Jumanji: The Next Level, Star Wars: The Rise of Skywalker, 1917, Bloodshot and Frozen II were joined on digital platforms by family-friendly releases such as Sonic the Hedgehog and Onward, as well as Knives Out and Jojo Rabbit, with average volume sales for digital purchase rising from more than 350,000 units per week in the 12 weeks from the start of 2020 to more than 565,000 units a week in the 12 weeks from March 28.
While the average selling price for a digital copy has risen year-on-year by 4.4% to £8.51 ($11.51), the fact that the ASP has fallen marginally against its pre-lockdown position suggests that consumers are also engaging with the value proposition offered by the breadth and depth of catalog content available through digital retailers alongside the pick of titles fresh from the cinema.
The diverse range of older titles that digital customers have sought out during the pandemic includes classics such as Forrest Gump, Top Gun, Grease, Apocalypse Now and titles from the “Harry Potter” franchise, with titles released pre-2010 representing 38% of all digital sales during lockdown.
“Across both digital purchase and rental, numbers have boomed during the lockdown period, with new and existing customers contributing to some 7.9 million transactions, up more than 22% on the same period last year and more than the same period in 2018, which supports the story of the transactional video category returning to growth,” said Craig Armer, strategic insight director at Kantar.
Armer said the number of transactional VOD customers doubled, accounting for more than 28% of the transactional VOD market in lockdown versus around 13% for the same time last year.
Families Engage with Premium VOD
One area of innovation driven by lockdown was the debut of premium VOD offerings, with titles earmarked for theatrical release appearing on VOD services early. Titles released in this model included Trolls World Tour, The Invisible Man, Emma, The Hunt and Military Wives, with PVOD offerings accounting for 6.2% of all digital rentals over the lockdown period according to data from Kantar. Due to the higher price point of these premium offerings, that figure translates to a 19% share of rental spend in the period, with Kantar estimating that more than half a million customers experimented with the new-release format.
In keeping with the PVOD success of Trolls World Tour, families have the largest share of spend and are accessing content through their TVs rather than through other devices, endorsing the popularity of the movie night in that continues to be a key occasion for transaction and, in lockdown, a welcome break from the situation the nation was dealing with.
“The fact that more than half of consumers anticipate they will maintain habits formed during lockdown, such as engaging more broadly with digital delivery, underlines the need for the video category to optimize around the opportunity delivered by the growth it has seen,” Bales said. “Historically, home entertainment has proved robust in times of economic crisis and the addition of a meaningful number of new customers to digital transactional, alongside the resilience of the disc market, means the video category at large has plenty to build upon even as consumer confidence and discretionary spend potentially become challenged as we look to the future.”