Although consumers are expected to spend no more on video entertainment in 2019 compared to what they did in 2018, there is significant turbulence occurring within the underlying market. 2019 is expected to be a stellar year for both Subscription Video on Demand (SVoD) and Box Office, offsetting a lacklustre year for transactional home video and Pay-TV markets, according to the latest Italian video insights market report from Futuresource Consulting.
SVoD grew 65% to €231 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. In 2019, consumers are expected to spend €340 million on SVoD, up by 47%, with 5.3 million households subscribing to one or more services,” commented Tristan Veale, Market Analyst at Futuresource Consulting. “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.”
SVoD is providing most of the impetus in the home video market, with annual consumer spend expected to reach nearly €1 billion in 2023. Growth will be driven by existing services, with Netflix and Amazon Prime taking off, along with the proliferation of new services.
Pay-TV remains a vital segment of the landscape 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. In 2019, following the rapid decline of Mediaset, since it lost key sports rights and sold its DTT operation to Sky, total subscriptions are expected to fall a further 7%, although revenue will be marginally less impacted.
Overall spend on TVoD (iVoD + Pay-TV VoD) is mostly stable, as Pay-TV VoD declines are offset by iVoD growth. This trend is expected to continue with iVoD growth increasing and Pay-TV VoD decline worsening, therefore marginal growth is predicted. However, if Amazon was to launch transactional video services, this could be a springboard for growth.
“TVoD is undergoing a phase of transition, as consumers are shifting to the convenience of iVoD. 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,” commented Veale. Overall market spend is expected to grow 3% to €61 million in 2019, equivalent to 12% of home video (including SVoD) and 31% of home video (excluding SVoD).
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