Australian consumer spending on digital entertainment reaches a record $1.2 billion

‘Rogue One: A Star Wars Story.’

Australians spent a record $1.2 billion consuming content on digital entertainment platforms in 2017, up 55 per cent on the previous year.

Spending on SVOD services, including Netflix (which has an estimated 3.6 million subscribers) and Stan, totalled $850 million while the online transactional movie and TV segment increased by 6.6 per cent to $281 million across retail and rental.

While DVD and Blu-ray revenues fell by 13 per cent to $748 million last year, the outlook for the home entertainment sector is very bullish as IHS Markit forecasts consumer spending on video (digital and physical) will grow from nearly $2 billion to $3.7 billion in 2021.

Those stats are revealed in the Australian Home Entertainment Distributors Association of Australia’s annual yearbook.

“Despite consumer consumption changing with technology Australians still love filmed entertainment, which remains a $1 billion industry and a robust and an important part of the Australian lifestyle,” AHEDA CEO Simon Bush tells IF.

“Australians are some of the highest per-capita consumers of filmed home entertainment in the world.” 

Demand for Blu-ray titles is cushioning the decline in the physical market, with Disney’s Rogue One: A Star Wars Story and Guardians of the Galaxy Vol 2 generating the highest volumes. Blu-ray revenues fell by 7 per cent but accounted for a record 17 per share of the physical market.

The industry sees a bright future for 4K (Ultra HD) as 265,000 titles worth $7.8 million sold last year. Sales are currently limited by compatible hardware: nearly 2 million 4K TVs have been sold but there are only 33,000 dedicated 4K players.

Consumer prices are steady, with the average fee for renting a digital movie at $5.81 and $3.13 to rent a TV title. Marvel’s Thor: Ragnarok was available on Apple’s iTunes store to buy for $19.99 in standard definition (SD) format and $24.99 in high-definition (HD).

Paramount’s Daddy’s Home 2 retailed for the same price but consumers could also rent the title for $6.99. Season one of hit TV show Big Little Lies is available to own for $22.99 or $3.49 for a single episode in HD and $19.99 and $2.99 in SD.

New release films on electronic sell-through (EST) are growing at 11.3 per cent but the SVOD services are eating into VOD revenues for TV content which dropped by 17.9 per cent.

The report forecasts Netflix will hit 10 million subs by 2021 while Stan, which saw a 48 per cent surge in active customers to 920,000 at the end of last year, is predicted to reach 1.8 million in three years.

The home entertainment market overall benefited from a 25 per cent decline in piracy last year thanks to the site-blocking orders.

Bush said the court process could be speeded up because it can take months for courts to hand down decisions, and the scope of orders should be widened to avoid content companies having to go back to court to seek further orders to block access each time mirror or proxy to the blocked sites pops up.