FACTS. ANALYSIS. HIGHLIGHTS.

Transcription

1 FACTS. ANALYSIS. HIGHLIGHTS. 2016

2 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 02 Robert Price Chairman, British Association for Screen Entertainment The home entertainment industry is constantly evolving to meet the needs of our customers and that has never been truer than it is today. Despite unprecedented change, and a more volatile economic climate, we continue to effectively manage our businesses so that people can continue to enjoy film and TV content in their chosen way. We ve had a strong start to 2016 with titles as diverse as Spectre, Legend, The Lady in the Van, the Hotel Transylvania franchise, Stick Man, Amy, Joe and Caspar Hit the Road, Davina McCall and War & Peace - all performing well and demonstrating the sheer breadth of content that we all enjoy from across the industry. How many other industries can claim to be part of a market that reaches so many, whether they are at home or on the go? To be part of a market that has not just coped with radical change but which has reinvented itself time-after-time and enhanced its relevance at every iteration? How many other industries can claim to be working for a business that creates an emotional connection with millions of people every single day? In the context of such a successful, ever-changing, dynamic industry, it is only right that we look hard at organisations like ourselves and ensure that we too are fit for purpose and ready to meet the challenges ahead. With that in mind, the BVA itself has adapted to reflect this evolving market. Our new name, the British Association for Screen Entertainment (BASE), is a clear and modern interpretation of what we do. It meets the evolving needs of our membership. It opens doors to wider audiences who may not have previously considered membership. And it focuses our work around the means by which our customers experience our industry rather than on one aspect of our category. It is a bold move and it forms a fundamental underpinning of our approach to championing the screen entertainment category across disc and digital today and for the years ahead.

3 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 03 Liz Bales CEO, British Association for Screen Entertainment Overall the home entertainment market grew to 2.24 billion in 2015, up 1.5% YOY, and is forecast to continue on that upward trend for the coming years. While digital services are blooming, half of our market continues to come from the purchase of discs proving the love affair for consumers with both ownership and physical products is far from over. According to the Official Charts Company, DVD and Blu-ray combined sold million copies and represented near half (48%) of the total home entertainment market value ( 1.1 billion) or nearly 1 in every 2 spent as consumers continued to value the convenience and quality of physical media. The value of the physical video market, in terms of consumer spend, is double that of the physical music market and 20% bigger than the value of the physical games market, putting into perspective the performance of the category and underlining yet again the quality and desirability of product produced by the industry. Thanks to the explosion in digital services, the market is now a fully multichannel model, spanning physical, digital, ownership, rental and subscription. It s a complex new economy, bringing with it new risks and rewards and one that requires an all-embracing Association to represent and champion it. Our new name reflects the breadth of our membership and allows us to open doors to new members from other parts of the ecosystem. Vitally, it provides a more sustainable footprint from which to continue to support the needs of all our members and to champion the growth of the category on their behalf.

4 FACTS. ANALYSIS. HIGHLIGHTS. PAGE : A truly multichannel year 2015 was the first year that the UK video industry went truly multichannel as uptake of digital video services reached a tipping point, delivering a greater than predicted 30% year-on-year uplift in sales. The growth of digital video offset the fall in spend on physical formats in 2015 pushing total consumer expenditure on home video up 1.5% to 2.24 billion. Consumers prefer to own Across all formats, ownership comprised 57% of the market, while rental and subscription accounted for 43%. HOME ENTERTAINMENT MARKET GROWS TO 2.24bn And they still prefer discs Despite the growth of digital, in terms of volume, discs still outsold digital taking 52% against 48%, as consumers continue to value the quality and convenience of physical media. Disc ownership continues to dominate consumer expenditure representing 48% of all spend, digital rental and subscription made up 40% and the remaining 12% of the market is accredited to digital ownership and physical rental.

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6 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 06 Value Millions Ten year total market trend % 80% % % % 0 Year Growth rate 2.1% 1.1% -8.4% -4.1% -2.2% -2.8% 0.7% -2.0% 1.5% Digital Ownership Market trends and forecast Spend on electronic sell through (EST) platforms such as itunes, Sky Store and Google Play increased 12% in 2015 whilst the value of transactional VoD (TVOD) increased 19%. Growth also accrued to subscription services (SVOD), such as Netflix, Amazon Prime Video and NOW TV delivering a 45% year-on-year uplift in sales. But as the figures show, the consumer mix is changing and 2016 is set to be the year that consumer spend on digital services overtakes disc for the first time. The growth driven by rental and subscription services mean that these are forecast to surpass spend on ownership in 2016 too. IN 2016 CONSUMERS WILL SPEND MORE ON DIGITAL ACCESS THAN DISCS

7 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 07 Cross-over between audio-visual markets 5.3% 0.9% Digital Video Disc Rental 4.7% 0.7% 23.7% 22.9% Disc Purchase 0.5% 0.5% 1.2% Cinema Digital goes mainstream: 10m+ people pay for digital content In the past five years there has been a fourfold increase in the proportion of consumers that have gone multichannel: that is they go to the cinema, buy discs and pay for digital content up from 2.4% in 2011 to 10% in There has been a fivefold increase - from 1.5% in 2011 to 8% in 2015 of those consumers who go to the cinema and pay for digital content, yet do not spend money on discs. 1.9% 0.7% 8.1% 1.2% 9.8% The multichannel mix In this multichannel world, discs remain an important part of the mix More than half, 59% of the British population bought or rented a disc or went to the cinema in 2015, some 29.5 million people. Of that 29.5 million, just over half (53%) access content via one channel, with a quarter (23.7%) only buying discs to own - that is they don t visit the cinema or pay for content digitally. 18% % total Consumers Similar proportions, 22.9% only visit the cinema and don t buy disc or digital content. One third of consumers access their content through just two channels. The most popular multichannel mix, with 18% of consumers, is going to the cinema and buying discs. DIGITAL GOES MAINSTREAM 10m+ PEOPLE PAY FOR DIGITAL CONTENT

8 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 08 A Digital HD world Digital ownership has been the success story of Based on their analysis, IHS forecast that the total electronic sell through (EST) market grew 12% in 2015, including Film and non-film titles. Meanwhile, Futuresource Consulting, using different methodology, estimate that the Film sector of the EST market grew c. 50%. Futuresource report that some of the best-selling EST Film titles, each selling in excess of 100k copies, include: Kingsman - The Secret Service, Fifty Shades of Grey, Jurassic World, Minions, American Sniper, Fast & Furious 7, The Hobbit Battle of the Five Armies and Interstellar. Futuresource also report that for ivod (transactional rental over the internet), several titles were rented in excess of 100k times including: The Imitation Game, Kingsman The Secret Service, Gone Girl, American Sniper, Interstellar, Lucy, Paddington and The Hunger Games Mockingjay Part 1. NB Futuresource methodology does not include titles from all distributors. DIGITAL HD MARKET N O W A CCO U N T I N G F O R OO VV EE R R TT WW O O TT HH II RR DD S S O F DD II GG II TT AA L L FF II LL M M SS AA LL EE S S Consumer appetite for higher quality content also continues to strengthen with High Definition (HD) now accounting for over two thirds of digital film sales (to own), compared to 80% of disc spend on the standard definition (SD) format. Apple s itunes is the consumers preferred platform with two fifths of the market with Sky having achieved 30% of spend in less than two years of launch.

9 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 09 Consumer profiles DVD Blu-ray Digital download GENDER DEMOGRAPHIC PROFILE AGE GENDER DEMOGRAPHIC PROFILE AGE GENDER DEMOGRAPHIC PROFILE AGE ABC ABC ABC % 53% 56% 73% 59% 50% 74% 70% 58% 73% of DVD buyers buy 1-4 DVDs per year and represent 28% of market value 10% of DVD buyers buy 12+ DVDs per year and represent 47% of market value 78% represent 32% of retail spend and buy 1-4 p.a. 4% represent 30% of retail spend, buying 12+ p.a. 72% represent 19% of retail spend and buy 1-2 p.a. 7% represent 59% of retail spend, buying 12+ p.a. The demographic make-up of the market varies by format. Overall, men continue to be the primary purchasers of all video content and they are particularly driving purchase of Blu-ray (73%) and digital downloads (74%). There are more similarities between those who buy Blu-ray and digital copies to own with both being younger with a male bias and higher social demographic profile and more likely than DVD buyers to be in skilled or professional employment. Whilst all age-ranges are consuming more digital content, two thirds of digital downloaders are under 35 years old. Across the board, these consumers are more likely to subscribe to some form of pay TV service. They are also 73% more likely to own a Blu-ray playing device and twice as likely to own a next generation gaming console. A hard core of very engaged consumers are driving income: 10% of DVD consumers buy 12+ DVDs per year and represent 47% of market value 4% of Blu-ray consumers buy 12+ Blu-rays per year and represent 30% of market value 7% of downloaders buy 12+ digital downloads per year and represent 59% of market value DVD buyers outweigh Blu-ray buyers by four times and spending on DVD is four times greater than on Blu-ray, despite the HD disc attracting a 50% price premium. In fact, some 38% of DVD/Blu-ray consumers are happy buying discs and don t ever plan to buy films or TV shows digitally. Now into its 10th year, two in ten consumers say that they are still somewhat unfamiliar with Blu-ray.

10 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 010 Consumers find comfort in disc Why? The resilience of DVDs is due to their overall fit with home needs. Consumers say they love them as they: need no explanation or specialist knowledge it doesn t matter how technical you are; can be used by everyone in the home from infants to centurions; remain easy to gift and share their ubiquity means over 90% of homes has a DVD playing device. The physical nature of the DVD is also very important to many consumers. A disc is often perceived as more substantial due to being tangible and therefore consumers place a higher value on it. Blu-ray continues to have the highest level of satisfaction amongst its buyers than any other video format. Where? DVDs are widely available to buy from over 15,000 retailers nationwide, including online. Consumers still prefer to buy discs from Supermarkets with one in two DVDs and one in three Blu-rays being sold via this channel. Consumers are now also buying more through less traditional outlets, such as fashion and DIY stores, garden centres and petrol stations. It is estimated that these nontraditional stores now represent approximately around one in ten sales. In short, DVDs provide shoppers and viewers of screen entertainment with comfort. I love to buy DVDs or Blu-rays and then you can just watch your film whenever you want because you have it in the collection. And you know it s a great quality and it just plays great. Male, age 31 Industry Trust/ICM research, January 2016.

11 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 011 The gift that keeps giving 24% Q1 21% Q2 19% Q3 36% Q4 One quarter of DVDs and one sixth of Blu-rays are bought as gifts throughout the year. Q4 regularly accounts for more than one third of DVD and Blu-ray sales volume as key titles are released as ideal Christmas gifts. Two fifths of spend on TV titles is in Q4. A decade ago the category was more reliant on Q4 as it represented one half of all sales, whereas today volume is spread more evenly across the year as a result of both changing release strategies and consumer behaviour. One fifth of annual DVD and Blu-ray sales are in December alone. Two thirds of Live Comedy and two fifths of Documentary Film sales are during December. January remains the most popular month for Fitness with one quarter of sales during the first month of the year. Blu-ray buyers rank these more highly as a gift than any other physical or digital format. Minions was the most gifted title during 2015 followed by Paddington, whilst Frozen overtook Toy Story 3 as the most gifted title ever, since records began.

12 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 012 Consumers love catalogue product across every genre Volume Value Prices vary widely with Catalogue Film on DVD averaging 5.70 whereas the average price of a New Release TV series on Blu-ray is Film product represents just under two thirds of DVD sales by volume and half of consumers spend on DVD. The biggest selling titles in 2015 were Frozen and The Lion King. CATALOGUE CATALOGUE TV product accounts for 14% of DVD volumes and one 65% NEW RELEASE 35% 56% NEW RELEASE 44% quarter of retail spend, thanks to its premium price. On Bluray, TV accounts for 7% of volume yet 14% of retail spend. TV accounts for nearly one third of consumer spend on Catalogue titles and just under two fifths of spend on New Release titles. The biggest selling TV titles of 2015 were Game of Thrones Season 4 and Downton Abbey. D E F C C B B D E New Release Catalogue F A Film 66% A Film 49% B Childrens 10% B Childrens 17% C TV 17% C TV 30% D E Music Sport & Fitness 2% 2% A D E Music Sport & Fitness 2% 2% A F Special Interest 4% F Special Interest 1%

13 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 013 Consumers both plan and buy on impulse One quarter of the population buy DVDs on impulse with a similar proportion buying as part of a planned purchase. Impulse purchases make up just over half of all sales and just under half of all consumers retail spend on discs. Planned purchases make up just under half of all sales and just over half of spend as they tend to be for higher priced New Release titles. Two thirds of retail spend on Blu-ray is for planned purchases.

14 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 014 Our vision The BVA has a proud heritage, representing the industry for the past 35 years. Over the decades we have seen an astonishing amount of change but unlike many industries, we have kept apace of that change, innovating and developing new technologies to meet consumers evolving needs. With that in mind, the BVA itself is evolving to reflect this changing market. As a first step, we have more deeply aligned with the Industry Trust uniting in one place, and under one leadership, both the promotion and protection of the UK s audio visual industry. The second step was to crystalize our strategy and root it in five strategic pillars which guide our activity and serve as the foundation of our work on behalf of our members: Insight; Innovation; Influence; Infringement; and Inspiration. In Insight we are the home for the very best and, in some instances, unique insight into the market. We enable our members to shape their businesses with a deep, rich understanding of consumers and consumer trends. In Innovation through a mix of unique research combined with skills and capability development, we help our members - big and small - innovate and lead their respective markets. In Influence we shape the market and the retail environment, persuade the politicians and regulators, and win the case for changes that enhance the operating environment for our industry. In Infringement we continue the fight against those that infringe copyright ensuring our members content is protected as far as is possible while guiding consumers to the many ways they can access content legally. And finally, in Inspiration we undertake work that inspires consumers towards ownership of both physical and digital products. By bringing together colleagues from across the breadth of our membership, from the smallest start-up, to the major players, we re able to inspire the sharing of knowledge and information to help them be ever more successful. Joining the British Association for Screen Entertainment Our members already represent over 95% of the market and we welcome new members from across the audio-visual ecosystem, from smaller independents to established players, offering flexibility through tiered levels of membership to suit different needs. Our services range from Insight Forums, Quarterly Market Reports, Market Intelligence and Market Forecasts, through to insight and communications programmes and a host of networking and education events. Access to services is subject to membership level. Members will have access to: For all membership enquiries, please contact Vicki Geddes at vicki@baseorg.uk

15 FACTS. ANALYSIS. HIGHLIGHTS. PAGE 015 Sources: Futuresource Consulting; Harris Interactive; ICM Unlimited; IHS; Kantar Worldpanel; Official Charts Company Acknowledgements: 20th Century Fox Home Entertainment; Abbey Home Media; BBC Worldwide; Entertainment One; HiT Entertainment; Lionsgate UK; Sony Pictures Home Entertainment; StudioCanal, The Walt Disney Company; Warner Bros; Universal Music; Universal Pictures UK Ltd Designed by

16 AWARDS Buy your tickets now Thursday 9th June 2016 Tobacco Dock For tickets and sponsorship enquiries please contact Vicki Geddes at AWARD AND ENTERTAINMENT SPONSORS AWARD PARTNERS CHARITY PARTNER