June 23, 2020
With the coronavirus pandemic projected to shrink Canadian consumer spending on video entertainment by 6% in 2020, the sector is expected to increase by 11% since 2019, thanks in part to Amazon Prime Video launching first-time digital sales/rentals of movies in April, according to new data from Futuresource Consulting.
Amazon’s transactional VOD launch is expected to help turn around a flatlining home entertainment sector and drive the market to a new level over the coming years, leveraging the ability to monetize consumers who are already engaged on the Prime Video platform for SVOD and can now find movies to rent or buy without having to leave the user interface.
Other factors jumpstarting Canadian consumer video spending includes a resurgence in box office, driven by a strong slate of releases enhanced by this year’s postponements and ongoing SVOD growth.
“Despite the challenges faced by the fallout from COVID-19, there have been some high points in the market,” market analyst Tristan Veale said in a statement. “SVOD has led the charge, with our forecasts showing a 39% increase in revenue in 2020.”
While social distancing and lockdown measures have resulted in consumers immersing themselves in streaming video services, including Disney+, this has not carried enough momentum to supersede the deficit created by the shuttered box office and large declines in physical media. Other factors include pay-TV cord cutting, dropping of sports TV packages, due to cancellations of sporting events.
SVOD will continue to drive growth in the Canadian video market, growing from CA$1.4 billion last year, to achieve in excess of CA$3.3 billion in 2024. The launch of Disney+ has been highly successful, bolstering the industry with nearly two million subscribers signing up before the end of 2019.
Amazon’s Prime service, in terms of household penetration, is also performing well, accelerating faster in Canada than it did in the U.S. or the U.K. The proportion of subscribers who are watching Prime’s video content is currently low, although Futuresource does expect this to rise.
As is the case in many territories, Netflix continues to dominate. It remains the market leader with 6.6 million subscribers at the end of last year, showing strong growth despite maturity. However, now at 45% household penetration and with a high proportion of password sharing, Futuresource expects future growth to become more difficult.
Bell Media’s Crave celebrated its fifth year in 2019 with strong growth helped along by HBO content and the final season of “Game of Thrones.” Crave’s peak of 2.7 million subs came during summer 2019, before falling back slightly by year end. Apple TV+ joined the market in November and has generated one million subs by the end of 2019. However, many are free annual subscription due to qualifying device purchases, retention once the free trial expires will be key.
“Despite the short-term industry challenges, next year’s recovery is expected to generate the largest consumer expenditure on video entertainment ever recorded,” Veale said. “What’s more, the growth will continue to be sustained, with an average expansion of 4% each year from 2020 to 2024, achieving nearly CA$13 billion in 2024.”