The Canadian entertainment video market is on the rise, bouncing back from the serious challenges of 2020, to grow by 4% in 2021. That’s according to a new Video Insights report from Futuresource Consulting, which shows that 2021 will reboot the market to within touching distance of pre-pandemic levels.
“Despite last year’s decline, when we dig into the detail there are some real high points in the data,” says David Sidebottom, Principal Analyst, Futuresource Consulting. “Removing box office from the equation, the new digital offerings and service improvements helped nudge consumer spend to a 3% increase on 2019. And many of the trends at play last year were already beginning to bubble up prior to the pandemic. We’re talking cord cutting, Pay-TV service diversification, local content investment, D2C service launches, and digital service and app improvements.”
Owing to a strong Pay-TV legacy culture and an advanced SVoD market, subscription services are the cornerstone of the Canadian market. Currently, they amount to more than 90% of total video entertainment spend, with Pay-TV accounting for nearly 75% of total video entertainment spend in 2020. However, Pay-TV’s downward path is leading to a 60% share of spend by 2025.
Declines in Pay-TV are being offset by the growth of SVoD, with consumer spend exceeding CA$2 billion in 2020, and more than four million new subscriptions in both 2019 and 2020.
“Canada commands a position as one of the world’s strongest SVoD markets,” says Sidebottom, “and SVoD homes now represent around 70% of all Canadian households. Apart for the USA, nowhere else on the planet has this level of SVoD penetration. This is partly pandemic driven, but also follows on from an exceptional performance in 2019. Plus, new service launches such as Disney+ and StackTV, alongside major momentum from Amazon Prime Video. Despite the increased competition, Netflix continues to lead the pack, accounting for over half of all SVoD consumer spend, with its Canadian revenue exceeding CA$1 billion for the first time in 2020.”
Yet there’s a digital services tax looming on the horizon, with mention in the government’s Q2 2021 budget that it will move ahead with implementation from January 2022. This is expected to add a 3% levy on foreign technology platforms, including Netflix and Amazon Prime Video. Objections are expected and it is still unclear how it will operate. If it does gain approval, Futuresource believes it’s unlikely to have any material impact on the development of the country’s streaming video landscape.
Looking to transactional digital video, the market remained steady in 2020, despite the turbulence in the wider environment. Yet Futuresource expects a challenging, with a return to market growth from 2022. Amazon’s drive to become one of the top players in the sector, plus the return of new release titles from late 2021 and into 2022 will help drive this renewal.
“There’s a bright future ahead for the Canadian entertainment video market,” says Sidebottom. “Our forecasts show 7% overall growth in 2022, with box office edging towards pre-pandemic levels, and steady development moving forwards. By 2025, we expect overall market spend to exceed CA$12.6 billion.”
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