Amazon Bucks the Trend of Netflix Video Leadership

Home Video Market Research, Analysis and Commentary

According to the latest Video Insights Report from Futuresource Consulting, the German digital entertainment market is at a pivotal point for rapid transformation, with significant unrealised potential in the sector.

The time is certainly ripe for further digital transformation of the video entertainment market. A disappointing 2017 for the traditionally robust packaged video sector has been partly offset by strong transactional digital video growth. Futuresource forecasts that the total video consumer spend will reach almost €8.5 billion in total in 2017, meaning it has expanded by over €1 billion in 4 years. A thriving digital video sector and rebounding box office have been key to 2017's positive performance.

Amazon is the consumers' service of choice and its growing significance is evident across a range of sectors. Futuresource estimates that in 2015 Amazon's total digital video sales equated to approximately €85 million, ramping up to over €260 million in 2017.

"Amazon was initially slow to develop its digital home strategy in Germany, especially compared to its aggressive promotional tactics in the UK and the USA. It now has an opportunity to expand its digital entertainment footprint and stronghold across Germany," commented David Sidebottom, Principal Analyst at Futuresource Consulting.

The firm is also seen to be raising the stakes further by investing in locally produced content, together with the launch of Amazon TV Channels. Combined with an aggressive device strategy including Fire TV and Echo, Amazon remains in a strong position to drive further digital video growth.

"Both Amazon and now Netflix are driving the SVOD in this ripe market," continued Sidebottom. "Netflix in its very unusual market follower position had its strongest year to date, partly due to embracing cable partnerships. Yet, in terms of achieving a pole position in the near to medium term, this is extremely unlikely."

The Futuresource report dives deeper into the apparent competition between Amazon and Netflix and states that there is strong overlap in their customer base. The limited overlap in content and further push on exclusive and original content means that this overlap between the two services will continue to be evident for the foreseeable future.

The Video Insights Series covers over 20 countries worldwide. Each report reviews the overall video entertainment market, assessing the impactors and drivers as the sector transitions to digital. Key areas of coverage include: Packaged home video; DVD & Blu-ray (sell-through and rental); Pay-TV VoD; Online Video; Electronic sell-through; iVoD and subscription online video; Subscription Pay-TV and Box office.

About the author

David Sidebottom

David is a Principal Analyst – Media and Entertainment. David has over 20 years’ experience in a research and consultancy environment and is closely involved in researching, analysing and consulting on key content industry and consumer technology developments worldwide, with a particular focus on the evolution of digital business models in the TV, video and music industry. David works with a wide variety of high profile Futuresource clients across the content ecosystem including studios, broadcasters, technology companies, hardware vendors, service providers and industry associations. He also directs Futuresource’s long-running global consumer panel ‘Living with Digital’.