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Statistics - 2016

Digital Business

Australian consumer spending on digital video, whether via Pay TV VoD, digital retail, digital rental or digital subscription, experienced rapid growth in 2016 driven by expansion of international and local digital video services. Australian consumer spending on digital video increased 69% to nearly A$755 million compared with the previous year. IHS Markit expects the strong growth to continue over the forecast period with the value of the Australian digital video market forecast to pass A$2.0 billion for the first time in 2020.

The Australian pay TV VoD services are proving resilient and showing little effect of cord cutting after consumer-level spending experienced solid growth of 8.4% to A$72.4 million in 2016.

Meanwhile, digital retail and rental transactional consumer spending grew 8.8% and 18.7% respectively in 2016. The combined digital transactional movie and TV market increased 14.1% to A$263 million - across the retail and rental business models. This reflects IHS Markit analysis of AHEDA member data, including Goods and Services Tax (GST) and grossed up to reflect the total market.

Australia: Digital Video Spending 2010-2020

Source IHS © 2017 IHS

The strong growth in the Digital Transactional Video Market was particularly impressive given an increase in competition from SVoD services such as Netflix, Stan and Foxtel Play as well as multiple free-to-view TV catch-up and TV everywhere services offered by public and pay TV operators alike – both of which occupy consumer’s time with a range of fresh and varied content. Although transactional digital offerings generally feature more recently-released content than online SVoD services, the latter have been especially adept at making their content easily accessible on a range of devices—most importantly the TV set—and also have begun to finance original and often home-grown movie and TV content.

Digital transactional video volume also recorded solid growth increasing 3.5% to 29.9 million in 2016 compared with a year earlier. Digital video transactions are paid-for transactional non-physical retail and rental purchases of Movie and TV content.

Australia: Consumer Transactions by digital service 2015 + 2016

Source IHS © 2017 IHS


Digital transactional spending is still very much focused on movies in Australia. The digital retail and rental of movies generated A$155 million or 76% of total transactional online video spend in 2016. The majority of value is generated by movie rentals: A$109 million in 2016. There is very little TV content consumed on a rental basis (TV VoD), which is primarily a reflection of availability. TV consumed via digital retail (TV EST) generated A$48.6 million in 2016, up 2.9% to reverse the decline experienced in 2015. The smaller amount of overall transactional consumption of TV content is largely due to consumers preferring to watch TV content in subscription environments. TV content in itself is designed for subscription or free-to-view environments, which are fundamentally non-transactional. Consumption of content on SVoD platforms, to a certain degree, can be characterised by the same casual (passive) and repetitive viewing habits, which are often associated with traditional TV viewing.

In terms of volume, Movies also dominate Digital Transactions in Australia. In particular, Movie VoD transactions, the previous year. Movie EST saw its importance increase by the same, up to an 11% share. The increase in Movie transactions came at the expense of the TV EST segment, which saw its importance decline two-percentage points to 18% over the same period.

Physical Business

The physical DVD and Blu-ray retail channel sold 44 million discs in 2016, for a total value of $806 million. Though the overall physical disc market was in decline, it is still one of the largest individual categories in Australia, generating more value than categories such as tablets or wearables.

GfK Retail Tracking: Physical Retail Market size

Source IHS © 2017 IHS

Blu-ray’s 2016 share increase was buoyed by improving shares in the new release movies and TV series release types, both of which have higher average prices than the overall market. Over a quarter of all new release movies are now purchased on Blu-ray.

2016 saw the debut of 4K Ultra HD Blu-ray. 65,000 4K Ultra HD titles were sold in 2016 for a value of $2M, or 2% of Blu-ray volume and 3% in value. The higher value share is due to a fairly substantial price differential between a standard Blu-ray title and a 4K title – the 4K Ultra HD average price is $31, compared to just $22 for standard Blu-ray. 4K Ultra HD is still in its infancy in the video entertainment market. There were 68 different 4K titles released in 2016, with action movies generating twice the share of the next biggest genre; Sci-Fi.

One of the current barriers to 4K Ultra HD sales is a relative lack of compatible hardware. There are plenty of 4K TVs available, over 600,000 have been sold in Australia, but there are relatively few 4K players that have launched in Australia. This is partially being addressed by the latest wave of games consoles, especially the Xbox One S, which has 4K player functionality.

The highest growing area in physical discs for 2016 was New Release movies. A combination of lower priced physical discs, higher shares of Blu-ray, and a growing box office have all contributed to this growth. The prices for New Release movies have dropped at a fairly steady rate since 2012, with particularly heavy activity in the sub $15 price band in 2015 creating an anomaly in the longer-term pricing trends. In 2016, 71% of New Release sales were for titles priced at less than $20 (compared to 67% in 2015).

Digital Content Guide