Dutch online video spend exceeds packaged

Overall video entertainment market spend in the Netherlands remained flat in 2014 and is on track to return to growth this year, according to research from Futuresource Consulting. The category – which includes digital video, box office, packaged video and pay-TV – totalled more than €2 billion in 2014 and is on track to exceed €2.1 billion in 2015.

Last year, a fall of 1 per cent for pay-TV subscriptions spend was offset by 3 per cent growth at the box office and 3 per cent growth in home video revenue. Following severe and continued declines in packaged video, digital spend is forecast to exceed packaged in 2015, accounting for 66 per cent of home video spend, driven by pay-TV VoD and Netflix.

“The Dutch video market tends to share similarities with the Nordics, more than any other European country, with rapid SVoD uptake and over 20 per cent decline in packaged video,” says Joanna Wright, Senior Market Analyst at Futuresource Consulting. “This shifting mix of video business was compounded by the bankruptcy of leading retailer, Free Record Shop, just a few months prior to Netflix’s launch.”

Growth of 51 per cent is anticipated for the overall digital video market in 2015 with retail spend totalling €215 million, accounting for an impressive 63 per cent of the home video market, a similar level to the US market in terms of digital uptake.

“As in many countries, subscription video on demand (SVoD) is a success story in the home video landscape, it witnessed phenomenal growth from a lower base and is expected to reach €111 million in 2015, driven largely by the launch of Netflix in late 2013,” says Wright. “SVoD is the fastest growing sector which now accounts for a third of the digital video market spend, overtaking EST and iVoD who command 4 per cent and 1 per cent respectively. Pay-TV VoD growth slowed to 8 per cent in 2015 and has been overtaken by SVoD as the dominant digital sector.

“Pay-TV is the backbone of the Dutch video market, reaching almost 100 per cent of households, giving it one of the highest penetration rates in Europe. It’s set to account for 72 per cent of the total video spend in 2015, remaining relatively stable from 2014. Despite such a developed market, average pay-TV ARPU stands at less than €20 and is expected to fall 1 per cent year-on-year to 2018, due to the growing mix of IPTV subscribers.”

The Netherlands continues to have the most significant Pay-TV VoD market in Europe in terms of spend per head (except for Belgium), and despite pay-TV subscriber saturation, pay-TV VoD spend grew by 8 per cent in 2014, with 8 per cent growth expected in 2015.

Looking ahead, overall video spend is expected to reach over €2.2 billion in 2018, averaging 2 per cent annual growth between 2015 and 2018. Pay-TV dominance will continue but its share of the market will fall from the current level of 74 per cent down to 68 per cent in 2018. Subscription VoD growth is forecast to be impressive and is expected to account for 55 per cent of all home video spend by 2018 to reach €240 million.

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