UK consumer spend on TV and video entertainment is on track to break the £10 billion barrier for the first time this year. That’s according to a newly-released UK Video Insights report from Futuresource Consulting.
“After a tumultuous 2020, which ended with the UK TV and video entertainment market retreating by 7% largely due to box office, 2021 is set to witness solid recovery,” says David Sidebottom, Principal Analyst at Futuresource Consulting.
“In 2020, we saw a rapid acceleration of the trends that were already gaining momentum before the pandemic. The streaming video sector has gone through the roof, partly driven by an influx of global streaming services providing even more consumer choice. Last year, SVoD and digital transactional video increased by over £800 million, easily enough to compensate for the decline in Pay-TV and packaged video. And there’s plenty more headroom for growth.”
Last year’s decline in Pay-TV spend was driven by lower ARPU, mainly attributed to Q1 and Q2 sports blackouts, and steady subscriber attrition on cable and IPTV platforms. However, Futuresource anticipates a small recovery this year.
Stay at home measures have proved highly beneficial to the UK SVoD market, with 60% of households now subscribing to an SVoD service, up from 50% at the end of 2019. The lion’s share of this household growth can be attributed to Netflix and Amazon Prime, which played commanding roles in the addition of nearly three million new SVoD homes in 2020.
“With all the SVoD action last year, we’re going to see a slowdown in growth in 2021” says Sidebottom. “However, our Living With Digital consumer survey shows that 30% of SVoD subscribers will take at least one new service in 2021. Yet they are also likely to be managing their subscriptions more closely now, dipping in and out when the mood takes them.”
New SVoD households are only one part of the equation, with service stacking becoming commonplace. Relative newcomer Disney+ has been a major factor in this, reaching approximately five million subscribers in its first nine months. Apple TV+, Britbox and Starzplay, along with a tranche of smaller specialist services, have also helped the service stacking surge. As a result, Futuresource expects the average number of SVoD services per SVoD household to reach around 2.5 at some point this year.
Digital transactional video has also continued to resonate with UK consumers, growing in value by 18% in 2020. This excludes the additional boost provided by early release titles through Premium VoD (VoD).
“Amazon Prime Video has been the key driver here, stealing share from all of its competitors,” says Sidebottom. “The pandemic has significantly boosted Amazon Prime membership and engagement, further enhancing its EST and iVoD sales.”
The UK continues to present itself as one of the most dynamic and diverse video entertainment markets on the planet. Futuresource expects steady growth across the forecast period, with total video entertainment spend set to reach almost £12 billion by 2025, as structural changes and changing movie release windows further contribute to the evolution of the sector.
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