As Digital Upsurge Begins, German Video Entertainment Approaching €10 Billion Consumer Spend in 2020

Video Entertainment Market Analysis and Commentary

2019 was a defining year for the German TV and video market, with mass market resistance to premium digital video finally falling away and paving the way for next month’s launch of Disney+. As the German market undergoes reinvention, newly released figures from Futuresource Consulting show total spend on video entertainment will reach nearly €10 billion in 2020.

“2019 was a year of structural change,” says David Sidebottom, Principal Analyst at Futuresource Consulting. “With Disney’s acquisition of Fox, and private equity group KKR’s acquisition of both Tele Munchen and leading independent Universum Film, there’s an increased industry focus on producing content for a wider array of platforms. This is helping to drive the shift to digital consumption, pushed along by the German launch of Apple TV+ in November 2019, closely followed by Joyn Plus+. Factor in Netflix’s continued ascendance as it closes the gap on Amazon Prime Video and we’re going to see a groundswell of consumer engagement throughout 2020.”

Recent consumer research carried out by Futuresource suggests that the launch of Disney+ in Germany won’t have as much market impact as it did in the USA, but the firm’s forecasts show it will still become a leading player behind Netflix and Amazon Prime Video in a relatively short space of time. Growth is expected to be boosted by telco and Pay-TV bundling and distribution, with leading Pay-TV operators and telcos likely to integrate the service onto their platforms. In addition, churn will be controlled by Disney’s extensive and popular back catalogue of movie content, which is set to remain part of their services indefinitely once introduced.

“German consumers have generally lagged behind their UK counterparts by two years in terms of premium digital content consumption,” says Sidebottom. “However, that’s beginning to change. SVoD and transactional digital video are both performing well. The strong catch-up TV culture also provides a bedrock for future paid-for premium digital video growth. With the raft of new services and the continued growth of Netflix, we’re expecting to see SVoD uptake increase from less than 1.5 services per SVoD household in 2018, up to more than two in 2022. Combined with robust Pay-TV subscription performance and growth in music streaming subscription services such as Spotify, we’re seeing an increased appetite for premium subscription content.”

Consumer spend on SVoD exceeded €1 billion in 2019, with Futuresource expecting total spend to reach €2.5 billion by 2023. Pay-TV hit €6 billion in 2019, largely due to the increased ARPU, up by €1.1 billion from 2014.

“Market movements have ushered in a new digital era for Germany,” says Sidebottom. “The full value of service launches will be felt across 2020 and beyond, with the TV and video market culminating in a value of almost €11 billion in 2023.”

Futuresource Consulting’s German Video Insights market report reviews the overall video entertainment market and assesses the impactors and drivers as the sector evolves. Key areas covered include Electronic sell-through (movie and TV), iVoD (movie), subscription online video (SVoD), Pay-TV VoD, DVD and Blu-ray (sell-through and rental), subscription Pay-TV and Box Office. For further information on this report, please contact Jack Tammaro via jack.tammaro@futuresource-hq.com

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’.