Netflix to boost German video revenues to €7.4bn

Total consumer spend on video entertainment in Germany will increase by 2 per cent in 2014 to over €6.9 billion after 5 per cent growth in 2013, and is on course to reach a total of €7.4 billion by 2018, according to findings from research and knowledge-based consulting company Futuresource Consulting. This growth is primarily being driven by the continued momentum in pay-TV spend, combined with the renewed activity in the digital video sector.

Overall digital spend will see a marked increase in 2014, by almost 50 per cent driven by new services and increased investment in the sector.

“The majority of the growth is attributable to subscription video on demand (SVoD), which is set to at least double in 2014, helped by the recent launch of Netflix and Amazon Prime Instant Video,” says David Sidebottom, Senior Market analyst at Futuresource Consulting. “These major services, together with the continued development of the Pay-TV sector, will drive the evolution of the video sector in Germany.”

“The arrival of Netflix in Germany marks the beginning of an exciting new era for the German video market, and for German consumers. However, it won’t be without its challenges, given the German consumers affinity for packaged media and many being traditionally resistant to premium subscription services. Also, the strength of free-to-air television has also been an obstacle to both digital video and Pay-TV services historically,” he advises.

According to Sidebottom, the much anticipated arrival of Netflix in additional European countries, including Germany and France, will provide a significant stimulus to the consumer transition to digital video in these countries. “However, it may encounter some cultural resistance, compared to its successful launches in other European countries,” he suggests.

The drive in SVoD services will see SVoD spend surpass total transactional digital video spend in 2015, with hardware and service partnerships also helping improve consumer awareness and familiarity. Key to service uptake will be the ability to harness the installed base of connected TVs, which is set to reach 46 per cent of households by the end of 2014.

The German pay-TV sector is continuing its impressive rate of growth into 2014, with analogue to digital conversion still a key driver of growth. Between 2010 and 2013, the pay-TV subscribers’ base grew by over 50 per cent, or 5.3 million, to reach over 15 million subscribers, with a further 10 per cent annual growth expected in the next three years.

At almost €1.5 billion, packaged video is set to account for over 21 per cent of total video spend in 2014, the highest level of any country in the world. After bucking the global trend and showing growth in 2013, the packaged video market is set to decline by 11 per cent in total in 2014, but still remains in a better state of health when compared to other markets worldwide.

You must be logged in to post a comment Login