Report: Netflix, HBO Drive Norwegian SVOD Market

Norway continues to expand over-the-top video consumption in Western Europe – spearheaded by subscription streaming video services such as Netflix and HBO Nordics.

New data from Futuresource Consulting found the Norwegian home video market grew 6% in 2018 — with 20% of consumers using SVOD services and spending 2.5 billion NOK ($290 million).

The London-based research firm said Netflix has dominated the Nordics with more than 1 million subscribers since launching service there in 2012.

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“The 26-35 age group has proven to be the key age demographic for Netflix and has almost gained a utility status,” market analyst Tristan Veale wrote. “As these consumers come of age, they have their own disposable income and convert from being Netflix users on someone else’s account, to account holders themselves.”

Veale said HBO accounted for 20% market share despite the lack of new “Game of Thrones” programming in 2018.

Regardless, Futuresource said traditional pay-TV remains strong in Norway, accounting for 70% of total home entertainment consumer spending. The company contends by 2023, the average Norwegian household will subscribe to two SVOD services, with OTT household penetration reaching nearly 80%.

Shortened Windows Drive South Korean Digital Movie Sales to No. 2 Behind U.S.

Move over Japan. After years of lagging sales, South Korea has emerged as the No. 2 market for digital sales of movies behind the United States, according to new data from Futuresource Consulting.

The London-based research firm said consumer spending on transactional VOD has increased 800% during the past six years largely due to a shortening of the theatrical window.

Dubbed “Super Premium” and introduced in 2013, the campaign afforded consumers with access to theatrical titles four weeks after their box office debut — shortened from 12 to 16 weeks.

Disney and Sony Pictures were the first studios to incorporate the shorter window, followed by other studios in 2014.

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The Super Premium window has become one of the biggest revenue drivers for the Korean market and typically accounts for two-thirds of transactional revenue, a key factor in the renaissance of the South Korean home video market — and diminished piracy, according to Futuresource.

The report found inconclusive evidence whether the shorter theatrical window negatively impacted exhibitors – as is the rallying cry against narrowing the window in the U.S. and elsewhere.

Futuresource found that the South Korean box office remained steady following the “Super Premium” rollout; albeit at a slower growth rate than before the campaign began.

The report found the Super Premium VOD/EST window has jumpstarted a South Korean home video market in decline following ongoing shrinking packaged-media sales.

“We could see this initiative rolled out to further territories, leveraging South Korea as a leading example,” Futuresource said.

It cautioned that shorter theatrical windows must still be analyzed as to their impact on box office.

“Perhaps [box office revenue growth] could have been higher had this not been introduced,” Futuresource reported. “What is clear is that traditional windows are coming under increased pressure, faced with a fast-paced, digital-first landscape.”

Report: Global SVOD Revenue to Increase 25% to $36 Billion This Year

A new report from Futuresource Consulting found that mainstream adoption of subscription streaming video continues to grow worldwide — reaching 60% of households in North America, 26% in Western Europe, 21% in Asia-Pacific and 19% in LATAM.

“SVOD has come of age, with consumer spend exceeding $29 billion last year, up 38% on 2017,” principal analyst David Sidebottom said in a statement.

The analyst cited improving broadband quality, smart TV penetration, availability of services and perceived consumer value.

Netflix and Amazon Prime Video accounted for 33% of all subscriptions globally in 2018 — but almost 66% total consumer spending on SVOD.

Disney’s acquisition of Fox, along with the completion of AT&T’s acquisition of Time Warner and pending OTT platform bow from WarnerMedia will further shape the SVOD landscape in the U.S. and, in the longer term, worldwide, according to London-based Futuresource.

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“Consumers are seeking a combination of functionality, high-quality original content and low price,” says Sidebottom. “Netflix has demonstrated continued growth in both its primary markets of the U.S. and U.K., as well as France and Germany. Plus, Netflix has many options for turning profit, each requiring a local market-specific strategy, based on maturity of infrastructure, device usage, access to local content, GDP and market share.”

Indeed, the report contends competitors to Netflix continue to underperform, with complementary services standing better odds of success.

Futuresource said exclusive, relevant and local content, particularly outside the U.S., is requisite to capturing and holding audience appeal.

While the uptake of multiple OTT services will continue to drive overall subscription numbers, the market will be limited to a small number of clearly differentiated and complementary services. This makes a carefully defined market and content strategy even more crucial, according to the report.

“Consumers face an increasingly confusing video landscape,” Sidebottom said.

He said Amazon Channels and pending Apple TV+ are both well-placed to succeed in the increasingly fragmented world of aggregation, but both currently lack “ubiquity of content” internationally.

“This new breed of ‘super aggregators’ will become an important component in the battle for the living room TV, though, in many instances, they have yet to fully realize the three consumer requirements, including quality, original content and price,” Sidebottom said.

SVOD Driving Danish Home Entertainment Market

Consumer spending in Denmark’s home entertainment market grew 7% in 2018 to DKK 10.21 billion ($1.53 billion) — driven by over-the-top video, transactional VOD and EST growth, according to new data from Futuresource Consulting.

SVOD (i.e. Netflix) spending grew more than 30% and is expected to DKK 2 billion mark by the end of 2019, accounting for more than 20% of total video entertainment consumer spend.

“Subscriptions grew 25% in 2018 to 2.1 million, with three services gaining 100,000 or more subscribers,” analyst Tanzim Rahman said in a statement. “SVOD consumer spend nearly doubl[ed] between 2016 and 2018 … growing by DKK 852 million. SVOD accounts for the majority of total growth in the entertainment market over the same period, which saw revenue rise by DKK 1.2 billion.”

Futuresource said SVOD in Denmark continues to benefit from a competitive landscape, with an attractive range of services from global players Netflix and HBO to local offerings from Viaplay and TV2 Play, with Netflix leading the market with 39% of subscriptions in 2018.

Streaming services are supported by a strong broadband environment, with average speeds of 39 Mbps and household broadband penetration at 83%.

As a result, Denmark saw a total of 1.2 million households subscribing to at least one SVOD service, leading to household penetration of 46% in 2018 — on par with the Nordic region average, which led European penetration rates in 2018.

Futuresource contends the transactional video market across both digital and physical formats is expected to decline by 2% to DKK 554 million, with the physical market declining DKK 57 million. However, from 2019 the transactional segment is expected to see a return to growth, propelled by a progressive EST sector, which will grow 31% to DDK 163 million.

Transactional digital video growth accelerated in 2018 to 16%, with total spend reaching DKK 349 million, although this is just 20% of the SVOD market.

A solid year of EST growth meant that revenue increased 38% to DKK 124 million, doubling since 2016, and accounted for 35% of the 2018 transactional digital market.

“Growth in EST has been driven by Viaplay and Google Play, although iTunes still dominates the market, taking a 57% share of spend,” Rahman said. “Apple have signed agreements with major TV manufacturers and is expected to consolidate its position over the coming years and help further stimulate the market.”

Transactional VOD continues to grow, but at a slower pace than EST, with spend increasing 18% to DKK 96 million in 2019 — and an average of 16% annually through 2023.

Netflix Pushed Canadian SVOD Spend Past $1 Billion in 2018

With Canada Netflix’s highest household penetration market, it’s no surprise consumer spending on subscription streaming video across the northern border surpassed CA$1 billion in 2018, according to new data from Futuresource Consulting. Overall spend on video entertainment in Canada remained flat at CA$11.3 billion.

By 2022, video entertainment in Canada is expected to be a CA$12 billion market, with SVOD carving out significant market share. In 2018, pay-TV accounted for 74% of the market, with SVOD and box office accounting for 9% each. However, by 2022 consumer spend on SVOD will be twice that of box office and therefore accounting for 17% of all video entertainment spend.

“SVOD spend broke through the CA$1 billion mark in 2018, up 33% with 11.3 million subscriptions,” Tristan Veale, market analyst at Futuresource Consulting, said in a statement. “This was driven by market leader Netflix, which reached 6.3 million subscribers, despite a steep price hike in 2018.”

The research firm said 58% of Canadian households have at least one over-the-top video subscription, with household penetration reaching 69% by 2022 — equal with pay-TV.

Growth was driven in part by Bell Media’s revamped Crave SVOD service which saw a nearly doubling of subs in 2018 – thanks in part to assimilation of pay-TV operator’s The Movie Network channel; in addition to Amazon Prime Video.

The rise in SVOD spend contributed to 8% drop in transactional (packaged media and digital) home entertainment revenue to CA$853 million.

Futuresource said consumers are buying more digital content digitally than renting — with EST spending projected to surpass transactional VOD and on-demand pay-TV by 2022.

Indeed, Canadians are buying more digital movies with nearly 7 million EST transactions recorded in 2018 — up 18% from 2017. Apple iTunes continues to drive EST sales in Canada, which accounted for over two thirds of spend across movies and TV content. Other services include Google Play Movies and Cinemax.

“There are an estimated 1.3 million Apple TVs in use in Canada, equivalent to 10% of households,” said Veale. “This means consumers have an easy way to watch premium content on a big screen, driving increased buying.”

Notably, Amazon has yet to commit to digital rental/sales of movies and TV shows in Canada, in addition to France, Italy and Spain.

“When it does launch, it could be a catalyst to propel these markets to the next level,” Veale said.

 

German Home Entertainment Market Topped $10 Billion in 2018

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.

 

Futuresource: Global 4K UHD TV Shipments to Surpass 100 Million Units in 2018

Pushed by average retail prices reaching parity with HDTV sets, annual global shipments of 4K UHD TVs are expected to surpass 100 million units in 2018, according to the latest market tracking report from Futuresource Consulting.

“The market will continue to grow with double-digit CAGR throughout our forecasting period to 2022,” said Tristan Veale, market analyst at Futuresource, in a statement. “What’s more, high dynamic range — HDR — is beginning to make its presence felt and will be included in over half of all 4K UHD TVs sold worldwide in 2018, though consumer understanding remains limited.”

The Asia Pacific region leads the way in volume, helped along by China, the largest single market for 4K UHD. North America has also seen strong uptake of 4K UHD, with rapidly declining prices and a general preference for larger screens, according to Futuresource. In Europe, the firm projects shipments will grow by 30% this year.

Global shipments of UHD Blu-ray players are expected to almost double the installed base of standalone players this year, according to Futuresource, while UHD compatible media streamer shipments will rise more than 85% year-over-year, accounting for nearly half of all media streamer shipments. Game consoles are significantly increasing the installed base of UHD Blu-ray capable homes, bolstered by consumers updating consoles and taking advantage of upgrades available for both the PlayStation and Xbox, according to Futuresource.

“When it comes to the content, SVoD remains the primary gateway for consumers to get their UHD fix,” said Veale in a statement. “Netflix is the key service driving UHD SVoD spend. Depending on the country, around 20 percent to 30 percent of subscribers have opted for the UHD premium tier.”

Physical media is growing as well, according to the firm.

“UHD Blu-ray content continues to progress ahead of the expectations of many, with global consumer spend on track to reach $360 million this year,” said Veale in a statement. “UHD Blu-ray has held onto its price premium and, as a result, consumer spend continues to outperform digital sellthrough of UHD, despite the volumes being almost identical.”

Broadcast of the format is also making strides.

“Broadcast UHD has also received a welcome boost in 2018, with February’s Winter Olympics and the FIFA World Cup accelerating many broadcasters’ plans to introduce 4K UHD coverage, making high quality streams available,” Veale said in a statement. “However, for wider uptake, a reduction in the cost to deliver UHD and HD broadcasts simultaneously is needed. IP delivery is expected to be key to this, at least in the short to medium term.”

Canal Plus CEO Blames Netflix, Regulation for Imminent Shuttering of SVOD Service CanalPlay in France

Canal Plus will close its SVOD service CanalPlay, due to waning subscription numbers in the face of competition from global players such as Netflix and Amazon, CEO Maxine Saada said during a hearing with the culture commission of the French senate, according to reports.

First launched in November of 2011, Canal Plus’s CanalPlay beat Netflix’s launch in France by nearly three years, reported Screen International.

CanalPlay at one time had some 800,000 subscribers but numbers have fallen to just 200,000 subscribers following Netflix’s arrival, Saada told the commission, according to reports. He said French regulations preventing CanalPlay from offering Canal Plus’s high-end originals on the service in the early years of its existence had hindered the ability of the service to compete with the global digital players, according to Screen International.

“At the moment when Netflix arrived on French soil, the only French SVOD player at the time was CanalPlay,” he said. “It had 800,000 subscribers, and we were banned from including originals in the face of Netflix and Amazon.”

That ban has since been lifted, but Saada said the change had come too late, Screen International reported.

“It’s over for CanalPlay. In two years, it has been erased from this market which is in the process of replacing that of television,” he told the French legislators.

“The announcement that CanalPlay is to close in France is another reminder of the growing requirement for major content investment to compete in the increasingly dynamic subscription video sector, particularly amongst local services,” stated Futuresource Consulting after the announcement. “CanalPlay will join the list of high profile closures worldwide over the last couple of years, all with significant parent companies; that includes Shomi (Canada), Watchever (Germany) and KPN Play (Netherlands). Futuresource estimates that CanalPlay had approximately 600,000 subscribers at the end of 2017, but has struggled to maintain pace in 2018 as Netflix momentum continues to build. Netflix doubled its subscriber base in France in 2017 hitting 2.5 million, with more subscriber growth expected for 2018.”

“Offering content that is unique, high quality and ideally, exclusive or original” is key, the Futuresource commentary noted.

“Such a strategy does not come cheap though, something that Canal+/Vivendi was seemingly not willing, or able to fund, particularly when its addressable market is more localised than the likes of Netflix or Amazon Prime Video,” Futuresource stated.

Report: 4K UHD Demand to Boost TV Growth in 2018

Consumer demand for TV sets is poised to return to growth in 2018, boosted by 4K Ultra HD models, according to the latest “Worldwide TV Market Report” from Futuresource Consulting.

The recovery of several markets linked with a transition to 4K UHD models will push the market up by 5% to $85 billion, according to Futuresource.

“We believe 4K UHD TV sets will ship over 100 million units this year, equivalent to two-thirds of the entire large screen market,” said David Tett, market analyst at Futuresource Consulting, in a statement. “Consumers increasingly want larger screens, and this is playing nicely into the 4K UHD proposition.”

The world’s two largest markets, China and the United States, both saw falls in 2017 but have a positive outlook in 2018, Futuresource projects.

“They have been ahead of most other markets in terms of adoption of 4K UHD and large screens generally. Over three quarters of sets that sell in the U.S. and China this year will be over 40 [inches],” said Tett in a statement. “However, other regions are now catching up, and Western Europe is on course to match the 44% Chinese household ownership of 4K UHD TVs by 2022.”

With a substantial installed base of 4K UHD TV households to target, content is now becoming available across markets, according to Futuresource.

“Consumer research shows that there has been a significant step-up in the proportion of 4K UHD TV owners who say they have watched this content at home,” Tett said in a statement. “This is the result not just of an expanding number of SVOD subscribers, but also a growing choice of content via linear TV.”

Big premium TV vendors are increasing using voice assistant platforms to attract consumers, according to Futuresource. Google Assistant and Amazon’s Alexa are being incorporated into the latest TVs from LG, Hisense, TCL and Vizio. Samsung, meanwhile, is utilising its in-house Bixby assistant in its 2018 QLED range.

Also, in pursuit of better margins, most vendors have introduced either QLED or OLED display technology to larger screens, according to Futuresource.

“The two largest TV vendors are currently on opposing sides; Samsung is the driving force behind QLED and LG is OLED’s primary backer,” said Tett in a statement.

Futuresource expects a 41% CAGR between 2018 and 2022 of these technologies, resulting in around 8 million sets shipping in 2022.
Among other findings, Futuresource expects high dynamic range (HDR) to be present in 60% of 4K UHD sets this year. HDR 10 is the most commonly found solution currently across vendors but the availability of a range of technologies including HDR10, HDR10+, HLG, Advanced HDR and Dolby Vision is leading to some consumer confusion, according to Futuresource.

Report: Global Entertainment Spending to Grow to $439 Billion by 2021 With SVOD Surging

Consumer spending on entertainment content (video, games and music) is set to reach $439 billion globally by 2021, a 17% increase from 2017, according to the latest “Global Entertainment Content Outlook” report from Futuresource Consulting.

“As expected, TV and video account for the lion’s share of this consumer spend,” said author Tristan Veale, market analyst at Futuresource Consulting, in a statement. “However, music has enjoyed a resurgence in recent years and continued innovations within gaming means that both markets are impacting on consumers’ spending habits, with smartphones a key facilitator of this tearing up of the entertainment market rulebook.”

Both gaming and music will achieve a compound annual growth rate of 7% over the next five years, whereas video is on course for a more modest CAGR of 2%.

Futuresource found subscription video on demand (SVOD) services such as Netflix, Amazon Prime Video and Hulu are rapidly dominating the overall home video entertainment sector, which in addition to SVOD includes DVD, Blu-ray, EST and VOD. In 2013, SVOD was just 13% of home video consumer spend, according to the report, but at the end of 2017, SVOD comprised almost half of the $42 billion spent worldwide. Global subscription numbers will rise at a CAGR of 15% between 2017 to 2021, according to the report.

“2017 was the year that annual SVOD spend exceeded worldwide spend on packaged media,” said Veale in a statement. “Not only this, but by 2021 SVOD will account for 70% of total home video spend with households taking multiple services instrumental in the growth of this sector.”

Still, by comparison in 2017 SVOD was a $19 billion market whereas pay-TV was a $200 billion market, according to the report, which noted that there remains a significant appetite for pay-TV services, due to bundling with broadband and telephone services, early availability of premium content, and access to exclusive content, notably sports. Pay-TV expenditure rose 4% from 2016. In value terms, the United States accounted for close to half of all the global spend, at $106 billion in 2017. In subscriber terms, China’s 336 million pay-TV households took the top global position, but the average household spend in China was $3 per month — just one tenth of the U.S. spend. The number of pay-TV subscribers fell in the United States, Canada and France with drops of 1%, 1% and 3%, respectively. Still, price hikes and migration to higher tier packages helped subscription revenue in the United States rise.

Pay-TV Lite services (most prominent in the United States), which include YouTube, Hulu and Sony PlayStation and traditional operator services from DirecTV and Xfinity, totaled 4.8 subscriptions in the United States at the end of 2017.

“With content remaining as one of the main differentiating factors, spend to secure exclusive rights continues to soar placing added pressure on operator’s margins,” said Veale in a statement. “Furthermore, this is compounded by the increased competition stemming from a growing number of online platforms that includes Netflix and Amazon and increasingly the likes of Facebook and Twitter, all of which have significant war chests for content acquisitions. Combined, the FAANG companies are looking to spend around $20 billion on video content in 2018.”

Futuresource noted increased M&A activity in entertainment, such as Comcast’s recent bid for Sky and Disney move to acquire 21st Century Fox, are the result of increased competitiveness in the sector.

“Economies of scale have never been more critical, as content distributors and owners seek to maximise return on investment through broadening reach to the widest audience possible,” according to Futuresource. “Global conglomerates are increasingly operating with a fully integrated entertainment offering, not just video but also actively involved in creating content for the growing games market and ever tighter commercial links to the music sector. Consequently, they can maximize intellectual property returns across these ever more overlapping content divisions.”

For the latest from Futuresource, click here.