Slender growth prospects for filmed entertainment

Box-office revenues are likely to surpass physical home entertainment sales next year but the overall Australian filmed entertainment market can expect minimal growth in the next five years.

PwC’s Entertainment and Media Outlook 2014-2018 predicts B.O. takings will increase from $1.1 billion last year to nearly $1.3 billion in 2018, a compound annual growth rate (CAGR) of 3.3%.

Pro-rata, that is better than the overall filmed entertainment market which PwC projects will expand from $2.6 billion in 2013 to $2.78 billion, a CAGR of just 1.1%.

PwC’s Megan Brownlow acknowledges the film sector is notoriously hard to predict because no one knows how commercial the product will be in the coming years.

“Cinema admissions are likely to remain stable as Australians continue to relish a unique experience which cannot be replicated in the home,” the report notes.

The physical retail and rental market will continue to decline but the firm believes DVD kiosks will help extend the rental market for at least five years.

Despite the growth in electronic sell-through and Video-on-Demand, home entertainment revenues are expected to fall from $1.43 billion in 2013 to $1.36 billion in 2018.

The outook for the in-store rental market is bleak as the firm predicts revenues will plummet from $82 million this year to just $16 million in 2018.

The entire sell-through category is forecast to decline from $1.17 billion to $1 billion. Craig White, CEO of Access Digital Entertainment, which owns e-tailer, contends that pricing is a barrier to digital sales, telling PwC, “Consumers are not seeing the benefit of paying $25 for a new release versus a $6 rental transaction. There is room for the price to come down on EST.”

VoD revenues from streaming and over-the-top services such as Apple TV, Xbox Live, PlayStation and JB Hi-Fi’s Now Video are expected to more than double, from $103 million last year to $255 million in 2018 .

The outlook is similar for Subscription VoD, which could expand from $43 million to $85 million.

“Despite the costs and complexity involved, we expect retailers will embrace digital as the shift becomes inevitable,” the report concludes.