Canada's video entertainment spend expected to rebound in 2021Tuesday, June 23rd, 2020
Canadian Video Entertainment Market Under Pressure, but Rapid Growth Expected for 2021 and Beyond
Canadian’s spending on the video entertainment market is expected to shrink by 6% this year, but will bounce back strongly in 2021, forecast to expand by 11% to surpass the success of 2019, according to a new video insights report from Futuresource Consulting. This return to form will be triggered by a resurgence in box office, driven by a strong slate of releases enhanced by this year’s postponements and powerful SVoD growth.
“Despite the challenges faced by the fallout from COVID-19, there have been some high points in the market,” says Tristan Veale, Market Analyst at Futuresource Consulting. “SVoD has led the charge, with our forecasts showing a 39% increase in revenues in 2020. Extra growth has sprung from social distancing and lockdown measures, which have resulted in consumers immersing themselves in streaming video services, including Disney+ which launched in November 2019. However, this has not carried enough momentum to cancel out the deficit created by box office takings, which we expect to halve in 2020, along with large declines in physical media. Pay-TV cord cutting and the dropping of sports packages, due to cancellations of sporting events, are also weighing heavily on the market.”
The SVoD Success Story
SVoD will continue to drive growth in the Canadian video market, growing from CA$1.4 billion last year, to achieve in excess of CA$3.3 billion in 2024. The launch of Disney+ has been highly successful, bolstering the industry with nearly two million subscribers signing up before the end of 2019. Amazon’s Prime service, in terms of household penetration, is also performing well, accelerating faster in Canada than it did in the USA or the UK. The proportion of subscribers who are watching Prime’s video content is currently low, although Futuresource does expect this to rise.
As is the case in many territories, Netflix continues to dominate. It remains the market leader with 6.6 million subscribers at the end of last year, showing strong growth despite maturity. However, now at 45% household penetration and with a high proportion of password sharing, Futuresource expects future growth to become more difficult.
Bell Media’s Crave celebrated its fifth year in 2019 with strong growth helped along by HBO content and the final season of Game of Thrones. Crave’s peak subscribers of 2.7 million came during summer 2019, before falling back slightly by year end. Apple TV+ joined the key market players in November and already achieved close to one million subscribers by the end of 2019. However, many are currently enjoying a free annual subscription due to qualifying device purchases, retention once the free trial expires will be key.
Amazon VoD Launch to Drive Digital Movie Buying and Renting
Amazon’s position as second largest SVoD service provides a strong base from which to spur on movie purchase and rental, which it launched at the end of April 2020. Amazon’s introduction is expected to help turn around a flatlining sector and drive the market to a new level over the coming years, leveraging the ability to monetise consumers who are already engaged on the Prime Video platform for SVoD and can now find movies to rent or buy without having to leave the user interface.
Market Growth to Continue out to 2024
“Despite the short-term industry challenges, next year’s recovery is expected to generate the largest consumer expenditure on video entertainment ever recorded,” says Veale. “What’s more, the growth will continue to be sustained, with an average expansion of 4% each year from 2020 to 2024, achieving nearly CA$13 billion in 2024.”
Links: Futuresource Consulting