Britons to spend more on online video than DVDs for first time

This year, for the first ever time, Britons will spend more on video streaming subscriptions and film/TV downloads than on buying and renting DVDs, according to research and consulting firm, Strategy Analytics.

Consumers will spend £1.31 billion on streaming and downloading in 2016 (23.7% more than 2015), compared to £956 million on DVDs (includes Blu-ray), a 16.3% decline to below the £1 billion mark for the first time since 1994. Online formats will, thus, account for 58% of home video spend, compared to 42% for DVDs, whose share in 2015 was 52%.

Splitting out online and DVDs into the five main methods of accessing home video, most spend in 2016 will still go on buying DVDs/Blu-ray, but that will drop 16% to £905 million.

Streaming subscription services, such as Netflix and Amazon Prime Video, follow next and are the fastest-growing format, rising 36% to £742 million – or £1 in every £3 spent on home video. There are around 4.6 million Netflix households in Britain and 2.5 million with Amazon Prime. Around 20% of households who subscribe to a video streaming service, subscribe to at least two.

Video streaming subscriptions will be the dominant format from 2017 onwards and will account for over half of consumer home video spend by the end of 2021.

Downloading to rent will rise 8% to £338 million in 2016, downloading to buy will rise 16% to £234 million. Spend on renting DVDs will fall 24% to £51 million, or just 2% of the market.

“Five years ago, DVDs represented 86% of consumer spend on home video, in five years it will be less than 14%, with DVD/Blu-ray rental virtually extinct,”says Michael Goodman, Strategy Analytics’ Digital Media Director. “As online provides increasing ways to access films and box-sets, physical simply can’t compete. Although many people will always prefer a physical disc, retailers will have to decide whether it’s even viable to offer that format in five years’ time. Many won’t and with less high street players around, it will be online, ironically, that keeps DVDs on life support via e-commerce.”

Overall, the £2.27 billion Britons will spend on home video is a 3% rise on 2015 and the equivalent of £6.63 per household a month. However, video advertising around streamed and downloaded content will rise 23% to £593 million. Thus, overall revenues for the home video market will grow 6.6% to £2.86 billion.