The UK Home Entertainment market – what marketers need to know.
IAB H1 2013 results show that the Entertainment sector makes up almost 11% of all digital spend during this period and is the third biggest spending category.
However, it is safe to say that this revenue still includes a minimal amount of investment from the Home Entertainment division of the film studios.
Surprisingly, they have still been reluctant to invest in digital media in 2013, continuing to spend in traditional media, like TV and press. This is despite a strong year for the UK Home Entertainment market which has been driven by digital formats. As more of their customers are moving online as well as the retailers, this is where their media investment should also be going, particularly if the industry’s ambitions lie in driving customers to buy rather than rent digital copies.
Value in all formats, both digital and physical, is up year-on-year by 2.5% to £1.38 million at the end of the third quarter of 2013, according to data published by the British Video Association.
DVD sales continue to grow with new release titles, such as Star Trek Into Darkness and Iron Man 3 up 9% vs. 2012 and sales are predicted to grow over the next few weeks with major titles, such as Man of Steel on sale this week, resulting in the first annual increase on new release DVD’s since the boom of Home Entertainment in 2007.
Another format growing in demand is Blu-Ray. Official Charts Company’s weekly survey shows that Blu-Ray revenues overall are up 31.7% year-on-year and now represent 17.4% of total video revenue, up from 13.2% this time in 2012. There are several other indicators that Blu-Ray will finally become a significant format in the market. Blu-Ray player household penetration is now more than 20% and is forecast to double in the next 5 years with the launch of new devices with in-built Blu-Ray players, such as Microsoft’s recently launched Xbox One.
The genre sales highlight that Blu-Ray is going from niche to mainstream. Sci-fi and Action blockbusters sales still make up a significant amount of the market share - 40.8% and 30.5% respectively but TV and family releases are now growing. For example, 30% of the sales of Game of Thrones: Second Series were on Blu-Ray and 27% of the total volume of Disney’s Jungle Book’s re-issued Diamond Edition sold was on Blu-Ray.
Although continued physical discs sales growth is forecast during the Christmas trading period, now is finally the time for growth of digital ownership in the UK and consumers will finally begin adopting cloud-based services, such as Ultra-Violet in 2014.
As mentioned previously, the leading growth format in 2013 is digital video with overall consumer spend in the third quarter up by 32% compared to 2012 to £123.8m, according to analysts IHS.
This is driven by consumer demand to be able to access the latest titles to view on their connected devices, both at home and on the go.
Right now just 2% of UK households buy digital movies online but device penetration has reached a level that will allow widespread adoption of digital delivery. According to Futurescope Consulting data, there is now 146.2 million connected devices in UK homes.
Added to this as are the benefits of Digital HD, including an early window – up to 3 weeks before a film’s release on disc. Another positive factor is the price, rarely above the cost of a DVD and a lot of movies are below £10.
Cloud storage is also a massive selling-point of Digital HD, allowing easy access to your content whether you have downloaded or streamed it.
Just as UK consumers have built DVD libraries in their homes, the industry now requires the online community to continuously expand their DHD libraries, rather than just purchasing Video On Demand.
Ultra-Violet is the key to this and this is the industry’s big focus in 2014 supported by the major studios and a media campaign managed by PHD Media. Downloaded or streamed, UV is now one of the best ways to watch digital content anywhere, on almost any device and as easy to use as catch-up TV. DHD is Ultra-Violet compatible if you buy it at a retailer that is part of the UV ecosystem.
A shift towards digital media investment from the studios is an important part of Ultra-Violet’s success in 2014. We have the devices and platforms to partner with the Marketing Managers and develop integrated cross-platform campaigns that will complement the customer’s online journey from browsing exclusive video content on MSN or Xbox through to the purchase of digital content through Windows 8 Ads in Apps.
So, let’s start talking about how to work together to maximise the potential of digital market in 2014.
Head of Entertainment and Media Partnerships, Microsoft Advertising
Source: Cue Entertainment Oct & Nov 2013
Figures from the US are a strong indicator of the significant growth potential of UK digital sales. 8.5% or 10 million homes are active Digital HD purchasers, up 50% year-to-date. Right now, TV episodes are most popular and films are becoming more important. In some cases, of total purchases across physical copies and DHD, 10-20% comes from DHD, particularly for a male demographic movie fan-base where 20% of all purchases are regularly from DHD.