The research firm said that consumer spend on video in the UK grew by 4% in 2013 to exceed £9 billion, and tipped further growth of 3% in 2014. For the period 2014 to 2018 it expects annual growth to average out at 2%.
While pay TV and SVoD will help drive these gains, Futuresource said that transactional digital video will only show moderate growth, cinema box office takings will remain steady, and packaged video will lose £1 billion in consumer spend.
“The UK video market has undergone significant change in the last two years, driven by increasing digital service choice, significantly improved infrastructure and connected device uptake. As the evolving retailer and service provider offerings continually shape consumer behaviour, the UK is becoming one of the most dynamic digital video sectors globally,” said David Sidebottom, senior market analyst at Futuresource Consulting.
Overall home video growth remained flat in 2013 at just over £2 billion, with a 166% growth in SVoD and moderate growth in transactional digital video helping to offset a 7% decline in packaged sell-though.
The total UK digital video market grew by 47% in 2013, reaching almost £450 million. Fututresource said that SVoD growth was “largely due to the success of Netflix” and predicted the overall digital sector will exceed £1 billion in 2017.
“Netflix has established itself as the leading player in the UK SVoD sector, primarily due to strong TV franchises and wide availability. But with the launch of Amazon Prime Instant Video, integrating Lovefilm and effectively replicating Amazon’s US video strategy, combined with the newer movie focus of Sky’s Now TV, the consumers choice of premium video viewing has never been greater, which in turn is driving industry revenues,” said Sidebottom.
Pay-TV homes on the UK reached 57% penetration in 2013 and at over £33 per month, ARPU is one of the highest in the world, according to the research.
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