The UK video entertainment market continues to put in an energetic performance, despite cost-of-living pressures stemming from high energy bills and rising food costs. A newly released report from Futuresource Consulting shows that the industry bounced back from its COVID-induced slump in 2021 and continued climbing, ending 2022 with an additional 10% growth.
Key drivers cited by the specialist research firm include increased spend across streaming services and the return of a healthy release slate at the box office. These two market segments will contribute to the ongoing upsurge during 2023, though cinema revenues are unlikely to hit pre-pandemic levels during the current outlook period.
“All this activity is laying the groundwork for another strong year in 2023,” says James Duvall, Principal Analyst, Futuresource Consulting. ‘From total entertainment spend of £10.8 billion in 2022, the signs are pointing to additional revenues of £500 million this year, with the box office being an important contributing factor to this growth. That’s being bolstered by a strong slate of blockbusters like Barbie and Oppenheimer, which achieved the second biggest UK box office weekend since 2019. While figures are still around a third behind average pre-pandemic levels, this shows the power of blockbuster titles and the willingness of audiences to return for the right film.”
Futuresource notes that there could be delays to the current release schedule, due to WGA and SAG-AFTRA strikes, as well as downward pressure from financial struggles at Empire and Cineworld.
Looking to streaming services, SVoD grew to represent 36% of consumer spend in 2022, yet Pay-TV remained dominant, accounting for more than one in every two pounds spent. Pay-TV operators continue to innovate and ensure that they remain a core part of UK households, delivering flexibility of service, additional content, new ad-driven channels, and allowing viewing across a wide range of devices.
“Netflix maintains its SVoD lead,” says Duvall, “with a crackdown on password sharing and its new ad-funded tier driving the strategy. Disney+ also introduced an ad-tier option in the USA in 2022, which is set to roll out to Canada and Europe on 1st November this year. With a UK subscriber base half that of Netflix, this new and cheaper tier has the potential to capture a large slice of the population.
“Amazon’s ad-tier platform, Freevee, sits alongside its wider portfolio of AVoD services, accessible to Prime members. However, with a Prime membership price hike of 20% during Q4 last year, Amazon’s utility status has been challenged, with a loss of subscribers. Despite this, Amazon was still able to post year-on-year growth.
Alongside this new report, Futuresource Consulting’s September publication of consumer research, Living with Digital, shows that 56% of UK respondents are somewhat or significantly worse off than they were six months ago. Whilst the highest of all countries surveyed by Futuresource, this has seen a year-on-year improvement of 4 percentage points. With the early signs of an improving position, Futuresource expects total video market entertainment spend to continue to climb throughout the forecast period, achieving revenues in excess of £12 billion by 2027.
For further information on Futuresource Consulting’s UK Video Insights report, or to make a purchase, please contact firstname.lastname@example.org
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