PwC: TVOD Movie Transactions Set to Return to Growth in 2023

The U.S. transactional VOD movie market is set to return to growth in 2023 after two years of revenue contraction in the wake of a revenue surge in 2020, fueled by the pandemic-induced home entertainment boom during lockdown conditions, according to analysis from PricewaterhouseCoopers.

The global business consultant said the TVOD market would increase at a 2% compound annual growth rate to $6.2 billion in revenue in 2027, from almost $5.7 billion in 2022.

TVOD revenue, which declined 4.4% in 2022, is projected to reach a peak growth of 3.2% in 2024, before falling back to 1.2% growth year-on-year in 2027. At the same time, the TVOD market will continue to lose market share to AVOD and SVOD, falling from 11.5% of total U.S. OTT revenue in 2022 to 8.3% in 2027.

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While TVOD remains a relative small market compared to subscription VOD and ad-supported VOD, PwC said it is worth noting that by the end of the forecast period, TVOD would still be large enough to rank as the fourth-largest global market by total OTT video revenue.

PwC must have a positive crystal ball since Q1 2023 TVOD revenue fell more than 12% to $564.35 million, from $643.57 million in the prior-year period.  TVOD revenue in 2022 increased 1.7% to $2.51 billion, from $2.47 billion in 2021. Digital transactional spending on theatrical content increased 11%.

British Ditching DVD Players?

Heading into last week’s Black Friday retail weekend in the United Kingdom, tech shoppers apparently weren’t looking for DVD players, desktop PCs and MP3 devices.

New data from Ofcom, U.K.’s communications regulator, found that 64% of consumers shopped for a DVD/Blu-ray Disc player in 2018 – down from 83% in 2008. Another 27% bought a MP3 player, compared to 44% in 2008. Less than 30% bought a PC, down from 69%.

“As technology evolves and transforms how we live our lives, the devices we rely on are constantly changing,” Ian Macrae, director of market Intelligence at Ofcom, said in a statement. “The growth in popularity of streaming services has created tremendous demand for connected TVs, which for many people are replacing DVD players, and the smartphone is replacing several other devices at once.”

While smartphones (78%), smart TVs (42%) and wearables (20%) have increased in popularity among British shoppers, connected DVD/Blu-ray players affording physical and digital access still resonate.

In fact, excluding the ubiquitous smartphone, DVD/Blu-ray Disc players still top tablets, E-readers, digital video recorders, smart TVs and wearables on consumer purchases in 2018.

With Netflix favored by 44% of 765 million people globally who use an over-the-top video service, according to eMarketer.com, connected disc players remain an important conduit linking the living room TV with the Internet.

Indeed, through 2022, consumer spending on traditional home video and pay-TV will decline less than 2% to $11.5 billion, according to consulting firm PricewaterhouseCoopers (PwC).