The market for video entertainment on physical media took another nosedive last year while the market for "digital" video continued to grow briskly, fuelled by streaming services such as Amazon and Netflix.
The decline of physical mediaMPAA's (Motion Picture Association of America) annual ?Theme Report’, citing global data from IHS Markit and US data from DEG, documents how revenue from video discs has plummeted from $25.2 billion globally in 2014 to $13.1 billion globally in 2018.
In other words; it has been cut almost in half. The market is declining 13-19% per year and the UHD Blu-ray format has done little to reverse the trend.
Leading consumer electronics manufacturers are also abandoning the disc market. In April 2018, Oppo announced that it was "time to say goodbye" and gradually stop production of DVD, Blu-ray and UHD Blu-ray disc players. In February 2019, Samsung confirmed that it pulling the plug on its Blu-ray players.
The shift from disc to onlineDuring the same 5-year period, the "digital" market for home video entertainment (online transaction and subscription) has surged 170% globally from $15.7 billion in 2014 to $42.6 billion in 2018. Last year, the market grew 29%.
- “Since 2014, digital spending has increased by 170 percent globally, while physical spending has decreased by 48 percent during the same period, reflecting the shift toward digital viewing choices,” the report from MPAA said.
As a whole, the home video entertainment market has grown from $40.9 billion in 2014 to $55.7 billion in 2018. Growth is driven by subscription streaming services and the market is expected to grow further when Apple, Disney, and WarnerMedia soon join the likes of Amazon, HBO, and Netflix.
As for MPAA, they are optimistic about the future.
- "We live in a golden age of stories," said Charles H. Rivkin, Chairman and CEO of MPAA. "Today, stories come to life for audiences in theaters, at home, and on the go. It is a dynamic marketplace that delivers creative content how, when, and where audiences want it."
Physical discs sales still represent a sizeable portion of the video entertainment market but the segment is being decimated yearly. UHD Blu-ray will likely remain a niche but even this segment has been showing signs of weakness lately. Will there be an 8K Blu-ray format? Time will tell.
- Source: MPAA, IHS Markit, DEG
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