January 9, 2019
The German home entertainment market – the fifth largest in the world – reached about €9 billion ($10.3 billion) in consumer spending in 2018, according to new data from Futuresource Consulting. The tally represented a 6% increase from 2017.
Principle drivers included subscription streaming led by Amazon Prime Video and Netflix. Indeed, Netflix upped its market penetration 50% in the country last year.There are now over 10 million German households subscribing to one or more service, which means that a quarter of German households are actively engaging with SVOD.
“The two services are mostly complementary and there is room for both to thrive,” analyst Tristen Veale said in a statement.
Moving forward, Futuresource expects multiple subscriptions per household to drive the market and, outside of Amazon and Netflix, there is a growing number of specialist services available directly, or via aggregators such as Amazon Channels.
The research firm expects major D2C launches such as Disney+ in the longer term, along with broadcaster-led initiatives in the near term, which it contends would help maintain strong subscription growth. This year, the German SVOD market will have doubled in 2 years and is forecast to exceed €1 billion ($1.15 billion) in 2020.
Five years ago, DVD and Blu-ray Disc accounted for 90% of consumer spending on home entertainment video in Germany (excluding theatrical and pay-TV). Fast forward to the end of 2018, and packaged media dipped below 50% of consumer spending – despite ongoing strength of Blu-ray.
“Some, but not all, of this deficit is being replaced by growth of digital purchasing or rental,” said Veale. “By 2021, we expect consumers to spend more on renting or purchasing digital movies and TV shows than they will on DVD’s and Blu-rays. However, transactional home video sellthrough and rental is a declining market segment overall; spending is expected to fall by an average of 9% per year between 2018 and 2022.”
Finally, consumer spending on pay-TV accounts for two thirds of the video entertainment market and is growing, even though many European markets are seeing stagnation or even declines, according to Futuresource.
“In Germany there is increased dynamism in the market, with an increased number of providers offering low cost, skinny bundle services as a viable alternative to the entrenched free-to-air/basic cable plans and premium subscriptions from Sky, which are currently available,” Veale said.