Futuresource: Amazon’s Canadian Launch of Digital Movie Sales/Rentals Expected to Jumpstart Video Market

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.

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“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.”

Transactional VOD, Disc Sales Up in Scandinavia

The Nordic video markets have always led global trends when it comes to over-the-top video, transactional VOD and packaged media. It’s no different during a pandemic.

Sweden, Denmark, Norway and Finland enjoy high penetration of superfast broadband, wide adoption of the English language, a strong market for entertainment and a high level of disposable income.

New data from Futuresource Consulting finds that while consumers in the region subscribe to multiple SVOD services, they are also driving a return to growth for the transactional video market.

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“To see transactional video shifting course and moving into a growth phase is something of a rarity,” market analyst Tristan Veale said in a statement. “These countries are expected to be amongst the first markets to experience the reversal, a direct result of changing consumer behaviour in the face of COVID-19.”

London-based Futuresource expects transactional VOD consumption or renting across DVD, Blu-ray Disc and digital to grow 4% in 2020, the second consecutive year of growth. The biggest player in the digital transactional space remains Apple iTunes, though key growth service Viaplay is successfully upselling transactional video to its existing subscriber base and is a close second

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Despite the rise in transactional video, the Nordics market remains dominated by SVOD, which accounted for 80% of all home video spend in 2019, with Netflix, Viaplay and HBO Nordic leading.

“The Nordic love affair with SVOD continues to blossom,” Veale said. “In 2019, for every dollar spent on transactional video, four dollars were spent on SVOD.”

Futuresource expects established services Netflix, HBO Nordic and Viaplay to be pushed by Apple TV +, which launched in Q3 2019, and the upcoming Disney+ debut.

On Netflix alone, consumers across Sweden, Norway, Denmark and Finland spent over half a billion dollars in 2019 and Netflix remains the leading SVOD provider, but it is slowly approaching saturation, as over half of all households across these four Nordics have a subscription.

“We expect SVOD subscriptions and spend to be pushed to a whole new level,” Veale said.

Streaming Filmed Content May Be Up, But Music Isn’t Sharing in the Spoils, Study Finds

Streaming services like Netflix, Disney+ and Hulu may be chalking up significant upticks in viewership due to the coronvirus pandemic stay-at-home orders, but music services aren’t enjoying a similar bonanza, according to Futuresource Consulting.

Indeed, the research firm in a study released April 27 said that since the lockdown began, some music streaming services have been seeing a drop in consumption.

“With key music consumption moments such as daily commutes, in-car, office and gym times being removed,” the study said, “consumers’ routines have been disrupted and so are their music consumption habits.”

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Futuresource also says the type of audio content being consumed has changed, “to more home-friendly lean-back and mood playlists as well as indoor activity podcasts (e.g. news, fitness, cooking, kids).”

Futuresource said it expects the growth of music streaming subscriptions to be relatively unaffected across 2020 as a result of COVID-19, with a total subscriber count forecasted to reach 371 million globally at the end of 2020, up 19% compared to 2019, according to its recently published Streaming Music Outlook & Services Overview report.

Futuresource: Music Streaming Declines in COVID-19 World

With the exception of vinyl records, subscription streaming music services remain the number one growth driver in the global music market, accounting for more than 70% of spending on music last year, according to Futuresource Consulting.

Yet, as measures to halt the spread of COVID-19 begin to reshape the lives of consumers, music streaming is experiencing a temporary decline, with consumption down from 15% to 20%.

“We may have expected to see an uptake in the use of streaming music services, as people become confined in their homes,” market analyst Alexandre Jornod said in a statement. “This is linked to consumers adjusting to new confinement rules, which have removed key music listening situations like the daily commute, as well as office and gym time.”

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Futuresource says that as families spend more time at home together, music consumption is becoming a shared activity. Before the pandemic people were using separate accounts to play different music, now smart speakers are likely to be used with a single account used to play music in the household.

The London-based firm said there is also competition from gaming, movie and TV show streaming. These activities require a higher level of attention and tend to be favored when some extra time is freed up as a result of routines being interrupted.

“Once consumers become accustomed to the situation and establish new routines, we expect streaming music to get back to levels similar to before the crisis,” Jornod said. “Home listening will dominate, with a shift in the music types and genres as consumers seek out lean-back mood playlists as opposed to searching for specific songs or artists.”

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Meanwhile, Futuresource said Spotify and Apple account for more than 60% of combined global subscriptions. Spotify remains No.1 globally, with Apple No. 1 in the United States. Amazon Music’s multiple streaming plans cater to a wide audience, although its subscriptions are closely linked to Echo smart speaker geographies, which skew heavily towards the U.S. and U.K., according to Futuresource.

The research firm contends Google-owned YouTube Music has the potential to become a key player thanks to its established YouTube audience. Smaller players like Deezer, Tidal and Napster are focusing instead on strategies such as targeting local markets, serving niche audiences or B2B operations.

“Streaming music subscriptions also benefit from markets where physical media has been historically strong and they are now transitioning to streaming,” Jornod said, alluding to Germany, Japan and France, which he said are experiencing accelerated adoption — unlike maturing markets in North America.

“Watch out for a rise in podcasts beginning to exert its influence, as well as enhanced listening experiences such as Hi-Res audio, Dolby Atmos Music and Sony 360 Reality Audio,” Jornod said.

Futuresource: Premium VOD, SVOD Drive South Korean Market

Largely a non-starter in the United States, premium VOD has gained traction in South Korea with consumers renting new-release movies in the home four weeks after their theatrical debut.

New data from Futuresource Consulting finds that eight years of Premium VOD distribution has propelled South Korea (an early hotspot for the coronavirus) to become one of the top transactional VOD markets in the world.

With the majority of cinemas around the world closed in response to the COVID-19 outbreak, studios (including in the U.S.) are now testing the opportunities in straight-to-home early digital video delivery. The Korean market remains a relevant global case study for countries now looking to adopt similar learnings within the home entertainment space, according to Futuresource.

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“Super Premium VOD in South Korea has allowed for early monetization by capitalizing on existing hype and marketing spend around each film,” market analyst Tristan Veale said in a statement. “However, throughout 2019 we saw some studios pulling out of these early windows altogether, with others reducing the number of titles offered. In light of the current global situation, this practice will see renewed interest.”

Despite transactional VOD strength in South Korea, the SVOD market is also set to soar, with consumer spend increasing 61% since 2019, almost equal to transactional home video. Veale said that’s because South Koreans are comfortable with subscribing to access premium content, paired with the well-supported infrastructure that already exists.

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“When it comes to the key players, Netflix accounts for nearly half of SVOD consumer spend and service subscriptions in the country,” Veale said. “Its focus on acquiring local-language content to develop a strong library of Korean content to build and retain a local audience, has led to this success, providing a near-continuous release of new series, movies and additional seasons, with Korean content also appealing to international territories.”

To combat Netflix’s rapid growth, major IPTV players such as Korea Telecom, SK Broadband and LG U+ are taking a variety of strategic stepsto improve their SVOD offerings, either through partnerships with Netflix or local SVOD players and broadcasters.

“SK Telecom has combined its video streaming service Oksusu with mobile on-demand service Pooq, owned by three local broadcasters, to create Wavve,” Veale said. “Wavve has a significantly advanced SVOD offering as a result of the backing of four major players.”

The high demand for exclusive content means that the outlook for SVOD in South Korea remains promising, according to Veale. South Korea’s pay-TV operator-dominated market will continue to forge local partnerships in a bid to generate the best home-grown video service possible.

“In this current climate, where people are forced to spend more time indoors, we expect to see a further rise in Premium VOD, buoyed by international support, along with rapid uptake of the new and existing SVOD services,” Veale said.

Futuresource: Coronavirus to Cut Global CE Revenue 5% This Year

With ongoing global concern about the potential coronavirus (COVID-19) pandemic, new data from Futuresource Consulting suggests the consumer electronics market could see a 2% to 5% full-year drop in retail value worldwide.

Most consumer electronics products are manufactured in China, the epicenter for the coronavirus, which has seen manufacturing and consumer demand scuttled. The Chinese CE market accounted for 22% of the $1 trillion industry in 2019, according to Futuresource.

At the same time, Johns Hopkins University said more than 100,000 coronavirus cases have been reported globally with the vast majority of infections and deaths (3,015) occurring in China.

“Having already faced disruption in 2019 due to the Sino-American trade war, COVID-19 has further highlighted the risks associated with over-reliance on Chinese manufacturing,” London-based Futuresource said in a statement.

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The research firm said while the full effects of coronavirus remain to be seen,  short and long-term effects on consumer electronics and media entertainment industries will be significant.

Specifically, supply chain disruption to hardware vendors reliant on Chinese manufacturing will struggle, with delays in the supply chain leading to product delivery difficulties and poor Q1 fiscal performance that could extend into Q2.

Futuresource expects the second half of the year to offset the difficulties with pent-up consumer demand translating into seasonality as opposed to an overall yearly decline.

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Meanwhile, digital media platforms such as SVOD, AVOD and transactional are benefiting from the crisis, with digital video, music, and gaming all seeing spikes in engagement, according to Futuresource.

Retail trends toward e-commerce are also accelerating, while collaboration technology and software is also a beneficiary of the crisis. Besides being a short-term effect, this could have implications in the long run, as consumers are likely to continue engaging with these platforms after the virus is contained.

“In a very short time period, COVID-19 has had a disruptive impact on individuals, countries and major companies alike,” Futuresource wrote. “[We] will continue to monitor the progression of the outbreak and provide further updates as the situation develops.”


Analyst: French Home Entertainment Third-Largest in Europe

The French TV and video entertainment market has struggled in recent years as over-the-top video undermines traditional distribution.

Now, the French, along with every other home entertainment market, has embraced SVOD as home entertainment — if for no other reason than statistics.

Futuresource Consulting says total video entertainment consumer spend is expected to exceed €7 billion ($7.7 billion) this year, making France the third-largest video entertainment market in Europe.

“Despite the closure of CanalPlay, SVOD has started to take off in France driven by Netflix’s fantastic performance,” analyst Tristan Veale, said in a statement.

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Veale attributed Netflix surge among French consumers due to part to the service spending freely for the rights to key local language TV shows, which have been well received and have created a buzz around the service.

“From 5 million subscribers at the end of 2018, representing half the market, we are expecting their sub base to grow further in 2019,” Veale said.

Indeed, SVOD revenue is expected to hit €827 million ($918 million) this year.

According to a Futuresource consumer survey, viewing Netflix on a TV is now the dominant way to watch the service in France.

“Over two-thirds of Netflix users now say viewing on any TV is their most preferred way, with Smart TV’s in particular a key driver, a trend we are seeing in many other markets we survey,” Veale said.

Notably, as myriad consumers worldwide subscribe to multiple SVOD serivces, the practice is still relatively uncommon in France, with less than 40% of SVOD households taking more than one service, with no significant challenger to Netflix since CanalPlay exited in mid-2018.

Futuresource contends the competitive landscape is expected to change as Amazon Prime Video ups its activity in the country and expected new SVOD entrants such as Disney+, Apple TV+, HBO Max and others target the French market over the next couple of years.

While these new services provide consumers more choice, Futuresource believes this trend will ultimately become frustrating for consumers, as programming choices become increasingly fragmented.

The research firm believes service providers that aggregate multiple services, provide pan-service search, navigation and provide a seamless user experience amongst the clutter of SVOD services will rise to the top.

Aggregation of other entertainment content, including video games and music, could also be a differentiator moving forward.

Companies like Apple with a broad range of TV/Video, music and games content could offer attractive “triple play” content bundles – Apple +, Apple Music and Apple Arcade, according to Futuresource.

“Gaming in particular is taking an increasing share of the consumer wallet, the French gaming software market will hit €3.5 billion ($3.88 billion) in revenue this year, with strong growth anticipated over the next few years,” Veale said.

Futuresource: SVOD Supplanting Pay-TV in Italian Home Entertainment

When it comes to consumer interest in subscription video-on-demand, Italians are no different than global trends.

New data from Futuresource Consulting found 2019 is expected to be a stellar year for both SVOD and box office in the Italian entertainment market, offsetting a lackluster year for transactional home video and pay-TV.

The London-based research firm said SVOD revenue grew 65% to €231 million ($256.4 million) in 2018, accounting for the majority of home video (DVD, Blu-ray, SVOD, TVOD, EST) spend for the first time.

“Netflix is a key driver of revenue, although TIMVision had more subscribers thanks to frequent bundling with broadband,” analyst Tristan Veale said in a statement.

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In 2019, consumers are expected to spend €340 million ($377.4 million) on SVOD, up by 47%, with 5.3 million households subscribing to one or more services.

“Following this current trajectory, by the end of 2020 there will be more SVOD households than pay-TV subscribing households, with Italy following the example of Australia where this has already happened,” Veale said.

Indeed, SVOD is driving the home video market, with annual consumer spend expected to reach nearly €1 billion ($1.1 billion) in 2023. Growth will continue to be driven by existing services, with Netflix and Amazon Prime Video taking off, along with the proliferation of new services.

While SVOD use proliferates, pay-TV remains a vital segment of the market and in 2018 on average accounted for 73% of consumers spend on video entertainment. However, changing consumption habits are placing this under threat and in 2018 subscriptions fell, and as a result retail value declined by 2% to €2.78 billion ($3 billion).

In 2019, following the rapid decline of Mediaset due to losing key sports rights and selling its DTT operation to Sky, total subscriptions are expected to fall a further 7%, although revenue will be marginally less impacted.

Futursource said total spending on TVOD remains stable, driven by growth of  iVOD growth. This trend is expected to continue with iVoD growth increasing and pay-TV-based VOD consumption worsening.

“TVOD is undergoing a phase of transition, as consumers are shifting to the convenience of iVOD,” Veale said.  “The ease of access of smart-TVs and media streamers provides a better experience compared to pay-TV VOD for many Italians, despite investment in its service from leading provider Sky.”

Indeed, overall TVOD market spend is expected to grow 3% to €61 million ($67.7 million) in 2019, equivalent to 12% of home video (including SVOD) and 31% of home video (excluding SVOD).

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.”