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UK video sector moves to the next level

MUMBAI: Futuresource Consulting assessed the pulse of the UK video market in its latest video insights report, announcing that this segment is in good health, driven by the growing appetite for digital video services, the resilience of packaged video retail and a healthy box office.

Futuresource Consulting senior marketing analyst David Sidebottom said, “The digital video market came of age in 2014, attracting new customers to both transactional and digital video. The total digital market grew by an impressive 55% to reach over £600 million, almost 4 times the level of 2011.

“Although SVoD more than doubled in 2014 and now accounts for over half of total digital video at £350 million, nearly 30% growth in transactional digital video in 2014 was perhaps more impressive given the disappointing performance in 2013 and 2012”.

2014 was a breakthrough year for EST in particular, as new and evolving services helped reach new customers. The total digital video market in 2015 is expected to continue its momentum, with anticipated growth of 40%, reaching £870 million.

The SVoD sector in the UK goes from strength to strength with three key players. Netflix, Amazon Prime Instant Video and Now TV continue to grow impressively. At the end of 2014 there were over 7 million individual subscriptions. This number is set to almost double to 13.6 million by 2019, with associated value crossing the £1 billion threshold in 2019.

The overall digital video sector was significantly helped by the rollout of fibre broadband and the wider availability of services on a fast growing connected device base, particularly relating to viewing on a TV screen. This combination has led to a vastly improved viewing experience for many in the online video sector, encouraging consumers to pay for premium content.

This perfect storm has enabled Netflix to capitalise on the growing trend to access content via IP. On the back of its low-priced Internet Subscription VoD (SVoD) business model, Netflix has grown its subscriber base to 60 million, of which 40 million are in the USA, and Futuresource estimates that the global total will reach at least 80 million by the end of 2016. This is approximately twice as big as any other pay TV content provider except HBO, which is currently available in 114 million home worldwide.

Its international expansion has been a huge success, with most countries it has launched in exceeding expectations. Its recent launch in Australia, where it is cited to have had approximately 250,000 people accessing the US version of the website prior to launch, is thought to have exceeded 500,000 subscribers in around a month. However, uptake in Germany and France has been slower, with some resistance to the service, whilst Japan could be its toughest and potentially most expensive launch yet, with language, culture and content in Japan all very different to Netflix’s previous experiences of international launches.