Market Turbulence in 2020 Will Lead to a Long-term Boost for the UK Digital Video Market

Video Entertainment Market Insights and Commentary

2020 continues to be a volatile year for the UK video and TV entertainment industry, with accelerated adoption across all OTT sectors and a lockdown boom that has played to the strengths of content hungry UK consumers. A new report from Futuresource Consulting reveals the full dynamism of the UK video sector, pointing to an uptick in all areas of digital consumption prior to lockdown, which is being boosted as lockdown continues.

This market volatility is also on track to lift the longer-term adoption of digital video and will set new revenue records next year.

Breaking the £10 Billion barrier

“Despite all the action right now in SVoD and transactional digital video, the current cinema closures and a potentially more challenging H2 2020 will be followed by renewed momentum in 2021. A strong slate will help the box office recover and in turn provide a major boost to the home video sector,” says David Sidebottom, Principal Consultant at Futuresource Consulting. “The polarisation of fortunes in 2020 means overall video and entertainment revenues are set to fall this year, but there is massive potential waiting around the corner. Our forecasts indicate over a 10% rise in consumer spend in 2021. What’s more, total spend on video will exceed £10 billion for the first time, driven by more consumers engaging with the sector, increased consumer choice and continued investment in the industry.”

SVoD will continue to be the key to growth in 2020, in part due to COVID-19, but momentum was already evident in 2019, with the sector growing 29% to £1.7 billion. Now SVoD is set to increase by 37% in 2020, achieving £2.4 billion, and more than offsetting the declines in Pay-TV spend.

Furthermore, digital rentals and purchases have hit record levels during lockdown, with consumers increasing engagement with transactional services, or discovering them for the first time, while early releases have further boosted the sector. Futuresource are anticipating that many new users added during lockdown will stay engaged with the format into 2021 and beyond, helping further improve the longer-term fortunes of transactional digital video.

Disney’s Perfect Timing Boosts Sector Profits

“Disney’s timing was impeccable,” says Sidebottom, “with Disney+ launching on the first day of full lockdown. Our forecasts indicate that the service will account for a significant proportion of the growth in the UK SVoD sector in 2020, with over four million UK subscribers. It is also estimated that Amazon Prime and Netflix have also added over one million subscribers so far this year, with subscribers to Amazon Prime enjoying the added benefit of free shipping during the pandemic. As the UK begins to open for business again, growth will continue, but there will be challenges in the sector around consumer retention, particularly for those reliant on monthly subscriptions.”

Content Production and Innovation Guarantee Future Profits for the UK

Beyond content delivery, the UK continues to make its mark as a leading global content production powerhouse. Major investments in studio facilities planned in and rolling out from 2020 to 2023 will further enhance its reputation and feed digital services with a growing range of quality content. In turn, this will help drive total sector revenues and UK exports, which can be reinvested into the industry. Solid growth will continue for the UK, with Futuresource forecasts indicating that the overall video and TV entertainment sector will reach £11.3 billion in consumer spend in 2024.

For more information on the Futuresource UK video insights report, contact Kailash Morjaria, kailash.morjaria@futuresource-hq.com. An upcoming wave of Living With Digital consumer research will also provide more detail on transactional, subscription and wider video behaviour both during and after lockdown.

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’.