By 2014 consumer spend on digital content will reach nearly $52 billion, accounting for 46 per cent of total global spend across media. This compares with the 24 per cent share in 2010. “While packaged media is declining, it certainly isn’t falling off a cliff,” explained Futuresource Senior Analyst, Mai Hoang. “The decline in packaged media across video, gaming and music has attracted a lot of debate regarding the future of entertainment content, but packaged media still plays a huge part in total sales. Combined with the availability of new platforms, digital and packaged media together will still achieve $112 billion in revenue in 2014.
“In 2010, packaged video generated $42 billion globally, and although decline is apparent in the video industry, packaged will continue to produce significant revenues in the coming years, with spend still at $33 billion in 2014.”
Sell-through currently accounts for the majority of total revenues in packaged media, though rental plays its part, this trend is set to continue as Hoang revealed.
“2014 will see sell-through account for 70 per cent of total physical video spend, of which Blu-ray contributes over 50 per cent, compared to just 13 per cent in 2010. Globally, DVD and Blu-ray rental is still significant, although popularity varies greatly between territories – in Japan, rental accounts for over half of total spend while in the European markets, rental barely accounts for 10 per cent share.”
In Western Europe Apple, Microsoft and Sony are the main contenders in the paid for online video market, while smaller service providers continue to fuel the competitive environment. As a result the market is hugely fragmented, with a variety of services offering very different business models. Objectives among online service providers also vary greatly and many services have struggled, with some exiting the market entirely over the last two to three years.
Hoang states that a number of strategies are being trialed to build bridges between digital and physical content, including industry initiatives to push digital through bundling, experimentation with release windows and exclusive downloadable content.