facts. analysis. highlights. - british video association · blu-ray (73%) and digital downloads...

FACTS. ANALYSIS. HIGHLIGHTS. 2 0 1 6

FACTS. ANALYSIS. HIGHLIGHTS. PAGE 02

The home entertainment industry is constantly evolving to meet the needs of our customers

and that has never been truer than it is today. Despite unprecedented change, and a more

volatile economic climate, we continue to effectively manage our businesses so that people

can continue to enjoy film and TV content in their chosen way.

We’ve had a strong start to 2016 with titles as diverse as Spectre, Legend, The Lady in

the Van, the Hotel Transylvania franchise, Stick Man, Amy, Joe and Caspar Hit the Road,

Davina McCall and War & Peace - all performing well and demonstrating the sheer breadth

of content that we all enjoy from across the industry.

How many other industries can claim to be part of a market that reaches so many, whether

they are at home or on the go? To be part of a market that has not just coped with radical

change but which has reinvented itself time-after-time and enhanced its relevance at every

iteration? How many other industries can claim to be working for a business that creates an

emotional connection with millions of people every single day?

In the context of such a successful, ever-changing, dynamic industry, it is only right that

we look hard at organisations like ourselves and ensure that we too are fit for purpose and

ready to meet the challenges ahead.

With that in mind, the BVA itself has adapted to reflect this evolving market.

Our new name, the British Association for Screen Entertainment (BASE), is a clear and

modern interpretation of what we do. It meets the evolving needs of our membership. It

opens doors to wider audiences who may not have previously considered membership. And

it focuses our work around the means by which our customers experience our industry rather

than on one aspect of our category.

It is a bold move and it forms a fundamental underpinning of our approach to championing

the screen entertainment category across disc and digital today and for the years ahead.

Chairman, British Association for Screen Entertainment

Robert Price

Liz BalesCEO, British Association for Screen Entertainment


Overall the home entertainment market grew to £2.24 billion in 2015, up 1.5% YOY, and is

forecast to continue on that upward trend for the coming years. While digital services are

blooming, half of our market continues to come from the purchase of discs proving the love

affair for consumers with both ownership and physical products is far from over. According

to the Official Charts Company, DVD and Blu-ray combined sold 119.6 million copies and

represented near half (48%) of the total home entertainment market value (£1.1 billion) or

nearly £1 in every £2 spent as consumers continued to value the convenience and quality

of physical media.

The value of the physical video market, in terms of consumer spend, is double that of the

physical music market and 20% bigger than the value of the physical games market, putting

into perspective the performance of the category and underlining yet again the quality and

desirability of product produced by the industry.

Thanks to the explosion in digital services, the market is now a fully multichannel model,

spanning physical, digital, ownership, rental and subscription. It’s a complex new economy,

bringing with it new risks and rewards – and one that requires an all-embracing Association

to represent and champion it.

Our new name reflects the breadth of our membership and allows us to open doors to new

members from other parts of the ecosystem. Vitally, it provides a more sustainable footprint

from which to continue to support the needs of all our members and to champion the growth

of the category on their behalf.

2015 was the first year that the UK video industry went truly multichannel as uptake of digital video services

reached a tipping point, delivering a greater than predicted 30% year-on-year uplift in sales.

The growth of digital video offset the fall in spend on physical formats in 2015 pushing total

consumer expenditure on home video up 1.5% to £2.24 billion.

Consumers prefer to own

Across all formats, ownership comprised 57% of the market, while rental and subscription accounted for 43%.

And they still prefer discs

Despite the growth of digital, in terms of volume, discs still outsold digital taking 52% against 48%,

as consumers continue to value the quality and convenience of physical media.

Disc ownership continues to dominate consumer expenditure representing 48% of all spend, digital rental

and subscription made up 40% and the remaining 12% of the market is accredited to digital ownership and physical rental.

2015: A truly multichannel year


TO

£2.24bn

HOMEENTERTAINMENT MARKET GROWS

Spend on electronic sell through (EST) platforms such as

iTunes, Sky Store and Google Play increased 12% in 2015

whilst the value of transactional VoD (TVOD) increased 19%.

Growth also accrued to subscription services (SVOD), such

as Netflix, Amazon Prime Video and NOW TV delivering a

45% year-on-year uplift in sales.

Market trends and forecast

2006

3000

2500

2000

1500

1000

500

2007 2008 2009 2010 2011 2012 2013 2014 2015

25922646

2676

2451

23502298

2233 22492204

2237

2.1%Growth rate

Year

Value£ Millions

1.1% -8.4% -4.1% -2.2% -2.8% 0.7% -2.0% 1.5%

20%

0

40%

60%

80%

100%

Digital Ownership

Ten year total market trend


CONSUMERS WILL SPEND MORE ON DIGITAL ACCESS THAN DISCS

IN 2016

But as the figures show, the consumer mix is changing

and 2016 is set to be the year that consumer spend on

digital services overtakes disc for the first time.

The growth driven by rental and subscription services mean

that these are forecast to surpass spend on ownership in

2016 too.

In this multichannel world, discs remain an

important part of the mix

More than half, 59% of the British population bought

or rented a disc or went to the cinema in 2015, some 29.5

million people.

Of that 29.5 million, just over half (53%) access content via

one channel, with a quarter (23.7%) only buying discs to

own - that is they don’t visit the cinema or pay for content

digitally.

The multichannel mix

Digital goes mainstream: 10m+ people

pay for digital content


Digital Video Disc Rental

5.3% 0.9%

23.7% 22.9%

1.9%

0.5%

4.7% 0.7%

0.5%

1.2%

18%

1.2% 9.8%

0.7% 8.1%

Disc Purchase Cinema

Cross-overbetween audio-visual

markets

% total Consumers

Similar proportions, 22.9% only visit the cinema and

don’t buy disc or digital content.

One third of consumers access their content through

just two channels. The most popular multichannel mix,

with 18% of consumers, is going to the cinema

and buying discs.

10m+

DIGITAL GOES MAINSTREAM

10m+PEOPLE PAY FOR DIGITAL CONTENT

In the past five years there has been a fourfold

increase in the proportion of consumers that have gone

multichannel: that is they go to the cinema, buy discs

and pay for digital content – up from 2.4% in 2011

to 10% in 2015.

There has been a fivefold increase - from 1.5% in 2011

to 8% in 2015 – of those consumers who go to the cinema

and pay for digital content, yet do not spend money

on discs.

Digital ownership has been the success story of 2015. Based

on their analysis, IHS forecast that the total electronic sell

through (EST) market grew 12% in 2015, including Film and

non-Film titles. Meanwhile, Futuresource Consulting, using

different methodology, estimate that the Film sector of the

EST market grew c. 50%.

Futuresource report that some of the best-selling EST

Film titles, each selling in excess of 100k copies, include:

Kingsman - The Secret Service, Fifty Shades of Grey,

Jurassic World, Minions, American Sniper, Fast & Furious

7, The Hobbit – Battle of the Five Armies and Interstellar.

Futuresource also report that for iVoD (transactional rental

over the internet), several titles were rented in excess of

100k times including: The Imitation Game, Kingsman – The

Secret Service, Gone Girl, American Sniper, Interstellar,

Lucy, Paddington and The Hunger Games – Mockingjay

Part 1.

NB Futuresource methodology does not include titles from all distributors.

Consumer appetite for higher quality content also

continues to strengthen with High Definition (HD) now

accounting for over two thirds of digital film

sales (to own), compared to 80% of disc spend on the

standard definition (SD) format.

Apple’s iTunes is the consumers’ preferred platform with two

fifths of the market with Sky having achieved 30% of spend

in less than two years of launch.

A Digital HD world


DIGITAL HD MARKETN O W A CCO U N T I N G F O R O V E R T W O T H I R D S O F D I G I T A L F I L M S A L E S

N O W A CCO U N T I N G F O R O V E R T W O T H I R D S O F D I G I T A L F I L M S A L E S


The demographic make-up of the market varies by format.

Overall, men continue to be the primary purchasers of all

video content and they are particularly driving purchase of

Blu-ray (73%) and digital downloads (74%).

There are more similarities between those who buy Blu-ray

and digital copies to own with both being younger with a

male bias and higher social demographic profile and

more likely than DVD buyers to be in skilled or professional

employment.

Consumer profiles

Gender

DVD

Blu-ray

Digital download

Age Demographic profile

54% are male

73% represent 28% of retail spend and buy 1-4 p.a.

10% represent 47% of retail spend, buying 12+ p.a.





56% of are 53% are

73% are male 50% are 59% are

74% are male 58% are 70% are 25 44

25 44

25 44

ABC1

ABC1

ABC1

DVDGENDER

54% 56%53%

AGE

25 54

DEMOGRAPHIC PROFILE

ABC1

73% of DVD buyers buy 1-4 DVDs

per year and represent 28% of market value

10% of DVD buyers buy 12+ DVDs

per year and represent

47% of market value

Blu-rayGENDER AGEDEMOGRAPHIC

PROFILE

78% represent 32% of retail

spend and buy 1-4 p.a.

4% represent 30% of retail spend,

buying 12+ p.a.

GENDER AGEDEMOGRAPHIC PROFILE


spend and buy 1-2 p.a.


spend, buying 12+ p.a.

Digital download

73% 50%59%

25 44ABC1

74% 58%70%

25 44ABC1

Whilst all age-ranges are consuming more digital content,

two thirds of digital downloaders are under 35

years old. Across the board, these consumers are more

likely to subscribe to some form of pay TV service. They are

also 73% more likely to own a Blu-ray playing device and

twice as likely to own a next generation gaming console.

A hard core of very engaged consumers are driving income:

• 10% of DVD consumers buy 12+ DVDs per year and

represent 47% of market value

• 4% of Blu-ray consumers buy 12+ Blu-rays per year and

represent 30% of market value

• 7% of downloaders buy 12+ digital downloads per year

and represent 59% of market value

DVD buyers outweigh Blu-ray buyers by four times and

spending on DVD is four times greater than on Blu-ray,

despite the HD disc attracting a 50% price premium. In fact,

some 38% of DVD/Blu-ray consumers are happy

buying discs and don’t ever plan to buy films or

TV shows digitally.

Now into its 10th year, two in ten consumers say that they

are still somewhat unfamiliar with Blu-ray.

Why?

The resilience of DVDs is due to their overall fit with home

needs. Consumers say they love them as they:

• need no explanation or specialist knowledge

– it doesn’t matter how technical you are;

• can be used by everyone in the home

– from infants to centurions;

• remain easy to gift and share – their ubiquity means

over 90% of homes has a DVD playing device.

The physical nature of the DVD is also very important

to many consumers. A disc is often perceived as more

substantial due to being tangible and therefore consumers

place a higher value on it.

In short, DVDs provide shoppers and viewers of screen

entertainment with comfort.

Consumers find comfort in disc

Blu-ray continues to have the highest level of satisfaction

amongst its buyers than any other video format.

Where?

DVDs are widely available to buy from over 15,000 retailers

nationwide, including online. Consumers still prefer to buy

discs from Supermarkets with one in two DVDs and one in

three Blu-rays being sold via this channel.

Consumers are now also buying more through less

traditional outlets, such as fashion and DIY stores, garden

centres and petrol stations. It is estimated that these non-

traditional stores now represent approximately around one

in ten sales.


“I love to buy DVDs or Blu-rays and then you can just watch your film whenever you want because you

have it in the collection. And you know it’s a great quality…and it just plays great.”

Male, age 31 Industry Trust/ICM research, January 2016.

One quarter of DVDs and one sixth of Blu-rays are bought

as gifts throughout the year.

Q4 regularly accounts for more than one third of DVD

and Blu-ray sales volume as key titles are released as ideal

Christmas gifts. Two fifths of spend on TV titles is in

Q4. A decade ago the category was more reliant on Q4 as

it represented one half of all sales, whereas today volume

is spread more evenly across the year as a result of both

changing release strategies and consumer behaviour.

The gift that keeps giving

One fifth of annual DVD and Blu-ray sales are in

December alone. Two thirds of Live Comedy and two fifths

of Documentary Film sales are during December. January

remains the most popular month for Fitness with one quarter

of sales during the first month of the year.

Blu-ray buyers rank these more highly as a gift than any

other physical or digital format.

Minions was the most gifted title during 2015 followed by

Paddington, whilst Frozen overtook Toy Story 3 as the most

gifted title ever, since records began.


36%Q4

24%Q1

21%Q2

19%Q3

Consumers love catalogue product across every genre

Prices vary widely with Catalogue Film on DVD averaging

£5.70 whereas the average price of a New Release TV

series on Blu-ray is £27.50.

Film product represents just under two thirds of DVD sales

by volume and half of consumers’ spend on DVD. The

biggest selling titles in 2015 were Frozen and The Lion King.

TV product accounts for 14% of DVD volumes and one

quarter of retail spend, thanks to its premium price. On Blu-

ray, TV accounts for 7% of volume yet 14% of retail spend.

TV accounts for nearly one third of consumer spend on

Catalogue titles and just under two fifths of spend on New

Release titles. The biggest selling TV titles of 2015 were

Game of Thrones Season 4 and Downton Abbey.


New Release Catalogue

Film

Childrens

TV

Music

Sport & Fitness

Special Interest

66%

10%

17%

2%

2%

4%

A

B

C

D

E

F

A

B

C

D

E

F

A

B

C

DE

F

Source: OCC

Film

Childrens

TV

Music

Sport & Fitness

Special Interest

49%

17%

30%

2%

2%

1%

A

B

C

D

E

F

NEW RELEASE

44%

CATALOGUE

56%NEW

RELEASE

35%

CATALOGUE

65%

Volume Value

One quarter of the population buy DVDs on impulse with a

similar proportion buying as part of a planned purchase.

Impulse purchases make up just over half of all sales

and just under half of all consumers’ retail spend on discs.

Planned purchases make up just under half of all sales and

just over half of spend as they tend to be for higher priced

New Release titles.

Two thirds of retail spend on Blu-ray is for planned purchases.


Consumers both plan and buy on impulse

Members will have access to:

For all membership enquiries, please contact Vicki Geddes at [email protected]


The BVA has a proud heritage, representing the industry for the past 35

years. Over the decades we have seen an astonishing amount of change

but unlike many industries, we have kept apace of that change, innovating

and developing new technologies to meet consumers’ evolving needs.

With that in mind, the BVA itself is evolving to reflect this changing market.

As a first step, we have more deeply aligned with the Industry Trust uniting

in one place, and under one leadership, both the promotion and protection

of the UK’s audio visual industry.

The second step was to crystalize our strategy and root it in five strategic

pillars which guide our activity and serve as the foundation of our

work on behalf of our members: Insight; Innovation; Influence;

Infringement; and Inspiration.

Our vision • In Insight we are the home for the very best and, in some instances, unique insight into the

market. We enable our members to shape their businesses with a deep, rich understanding

of consumers and consumer trends.

• In Innovation through a mix of unique research combined with skills and capability development,

we help our members - big and small - innovate and lead their respective markets.

• In Influence we shape the market and the retail environment, persuade the politicians and regulators,

and win the case for changes that enhance the operating environment for our industry.

• In Infringement we continue the fight against those that infringe copyright ensuring our members’ content

is protected as far as is possible while guiding consumers to the many ways they can access content legally.

• And finally, in Inspiration we undertake work that inspires consumers towards ownership of both physical

and digital products. By bringing together colleagues from across the breadth of our membership, from

the smallest start-up, to the major players, we’re able to inspire the sharing of knowledge and information

to help them be ever more successful.

Our members already represent over 95% of the market and we welcome new members from across the audio-visual

ecosystem, from smaller independents to established players, offering flexibility through tiered levels of membership to

suit different needs. Our services range from Insight Forums, Quarterly Market Reports, Market Intelligence and Market

Forecasts, through to insight and communications programmes and a host of networking and education events.

Access to services is subject to membership level.

Joining the British Association for Screen Entertainment


Sources:

Futuresource Consulting; Harris Interactive; ICM Unlimited; IHS; Kantar Worldpanel; Official Charts Company

Acknowledgements:

20th Century Fox Home Entertainment; Abbey Home Media; BBC Worldwide; Entertainment One; HiT Entertainment; Lionsgate UK; Sony Pictures Home Entertainment;

StudioCanal, The Walt Disney Company; Warner Bros; Universal Music; Universal Pictures UK Ltd

Designed by

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