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Statistics - 2017

The AHEDA Yearbook has in-depth and specific chapters on the digital and physical home entertainment business. This overview provides a snapshot and summary of the markets.

Digital Business

The Australian video market reached a significant milestone in 2017 as consumer spending on digital video overtook spending on physical video for the first time. Australian consumer spending on digital video, whether via Pay TV Video-on-Demand (VoD), digital retail, digital rental or digital subscription, surged 55% to A$1.2 billion in 2017 compared with the previous year. The combined digital transactional movie and TV market increased 6.6% to A$281 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.

Australian consumer revenue from digital transactional video plateaued in 2017, up just 1.0% to A$205 million (consumer spending minus Goods and Services Tax) compared with a year earlier according to IHS Markit analysis of member data from the Australian Home Entertainment Distributors Association (AHEDA). A decline in TV transactions and a switch from Movie rental to Movie retail underlies the result.

Digital retail, also known as ‘electronic sell-thru’ (EST), ‘download-to-own’ (DTO), and ‘digital sell through’, increased 2.6% to A$94.9 million in 2017 compared with the previous year. Digital rental, also known as ‘Video-on-Demand (VoD) and ‘Pay-Per-View (PPV)’, declined 0.3% to A$109.8 million over the same period.

Following steep growth in 2012-2016, the Australian combined digital transactional video market is expected to plateau as competition from digital subscription services, free-to-view TV and TV everywhere services offer viewers unprecedented access to new and original content. The competitive advantage of featuring new release content that transactional digital services used to enjoy is diminishing. OTT subscription services are increasingly producing original movie and TV content to attract and retain subscribers.

Digital transactional video volume (VoD and EST) data from AHEDA members indicates that the number of movie and TV transactions declined 2.2% to 29.4 million in 2017 compared with the previous year. Digital video transactions are paid for non-physical retail and rental transactions of Movie and TV content. In terms of volume, Movies also dominate Digital Transactions in Australia. In particular, Movie VoD transactions, which increased its share by one percentage point to account for 70% of digital transactions in 2016 compared with 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 vs. Digital

Video Entertainment continues to be a dominant market in Australia, with a rise in digital revenue and a resilient physical market. In 2017, the Video Entertainment market generated $947 million, as 78 million units were rented or purchased either physically or digitally. This marks Video Entertainment as the fifth largest category that GfK measures, across over 100 categories here in Australia.

This is not taking into account the growing revenue from streaming services such as Netflix or Stan. Through the GfK ConsumerScope service, we have seen an uptick in consumption of these streaming services, with 39% of the Australian population accessing these services in 2017 (up from 29% in 2016). Excluding the digital streaming services, physical rental and purchase still generate the highest levels of volume and value, accounting for 54% of volume and 71% of value.

Digital is on the rise, however, and accounts for 46% of the total volume (excluding piracy) and over a quarter of all value in 2017. Piracy levels have also dropped in 2017, helped by government initiatives and the rising availability of content through legal means. For more information on piracy and the growth of the digital streaming services please read the GfK chapter on consumer digital trends. The physical disc retail market accounted for nearly half the volume of Video Entertainment and is still the largest value sector. The market has declined since its peak in 2009 as consumers have diversified the way they watch their Video Entertainment content.

Blu-ray

Blu-ray continued to be a relative bright spot in the physical disc market, selling nearly 5 million discs for a value of $109 million. The 7% decline in Blu-ray volume was much lighter than DVD, which declined by 15%. Blu-ray also registered its highest ever share in the market, with 17% of total market value now going through the Blu-ray format. The highest Blu-ray value share was recorded in New Release movies, where Blu-ray contributes 28% of value. This was driven by titles such as Disney’s Star Wars Rogue One and Guardians of the Galaxy Vol 2. From the GfK ConsumerScope service, one of the key selling points for the Blu-ray format is bonus content. 24% of consumers with Blu-ray capable hardware say that bonus features or special editions factored into their thinking when buying a disc.

Ultra HD 4K Blu-ray

265,000 Ultra HD 4K titles were sold in 2017 for a value of $7.8 million. This equates to 5% of Blu-ray volume and 7% of value. The higher value share is due to a substantial price differential between a 4K title and a standard Blu-ray title, $30 and $22 respectively. Action movies generated twice the value share of the second biggest genre; Adventure. Although more Theatrical Catalogue titles were released, 64% of value came from Theatrical New Release titles released in 2017. Interestingly, the top selling 4K title was not a theatrical title, but TV Documentary Planet Earth II. Only one other television series, Westworld Season 1, was released in 4K. 4K titles generated more value than 3D titles overall, $7.8 million compared to $6.0 million for 3D. This is being impacted by a relatively low release rate of 3D titles in 2017. Only 32 new 3D titles were released in 2017, compared to 116 for 4K. By title, the average value generated for a 3D title released in 2017 was 2.5 times that of 4K, $125,000 compared to just $51,000. The average price for 3D titles is 17% lower than 4K, at $25.

Sales for 4K discs are impacted by the availability of compatible hardware. Nearly 2 million 4K TVs have sold since the launch of 4K technology in Australia, meaning there is no lack of 4K capable screens. A potential barrier could be 4K players, with only 33,000 dedicated 4K disc players sold so far. Adding in 4K gaming consoles, as well as dedicated players that can stream 4K content, the number of 4K capable players rises to 723,000. This equates to nearly ten 4K discs purchased for every dedicated 4K player, or just under one and a half 4K discs if you include the gaming consoles capable of playing 4K discs.

Top 5 DVDs (AUG)

1. MARVEL THE AVENGERS INFINITY WAR
2. DEADPOOL 2
3. I FEEL PRETTY
4. THE GREATEST SHOWMAN
5. RAMPAGE (2018)
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Digital Content Guide