Market Insight

Rate of decline slows for French physical video in 2014

November 06, 2014  | Subscribers Only

Daniel Stevenson Sutton Daniel Stevenson Sutton Senior Research Analyst, Service Providers & Platforms

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  • The total French physical video market is due to decline 15.8% in 2014 to €802.1 million.
  • Blu-ray Disc consumer spending declines for a second year to €186.6 million.
  • Total French physical video market is due to decline by 53% by 2018 to 29.1 million.

IHS has revised forecasts for the physical video retail market in France following the publication of first half data by the Syndicat de l'Edition Vidéo Numerique (SEVN) and in consultation with industry sources.

Whilst sales of DVDs have continued to decline, in line with IHS forecasts, there has been an increase in the rate of decline of Blu-ray Discs (BD) in the first half of 2014; with little indication from studio sources that a second half recovery can be expected. DVD unit sales are forecast to decline by 15.4% in 2014 to 52.6 million retail units, with consumer spending reaching  €615.6 million ($461.7 million) a decline of 17.6%. The average consumer DVD price will decline by 23 cents (-0.9%) to €11.70.

Blu-ray Discs, which prior to 2013 had enjoyed uninterrupted of growth since the format’s 2007 launch, declined for a second year. However, the rate of decline slowed in 2014  with end of year retail unit sales forecast to reach 9.5 million, a decline of 7.7%. Consumer spending will decrease to €186.6 million, a decline of 9.9%. Blu-ray Disc consumer prices continued to decline by 7 cents to €13.03.

The overall physical video market in France will decline by €127 million in 2014, a decrease of 15.8% compared with 2013.

Our analysis

When compared with 2012 and 2013 the recorded rate of decline for both DVD and BD has slowed as France’s retail landscape stabilizes following the disruption caused by the loss of distributors and retail outlets in previous periods. As in 2013 there continues to be a trend towards the reduction of shelf space allocated to DVD and BD. Indeed, industry sources have indicated that one electronics retailer is expected to remove DVD and BD software altogether from over 100 of its large format stores in the new year. Although the removal of product from these stores is not expected to have a significantly detrimental effect on the retail landscape in 2015 it is worth noting that given the floor space available in these stores (approximately 2000m² per store), the removal of DVD and BD from point of sale further illustrates the changing role of DVD and BD to retailers’ product mix.

In addition, the entrance of Netflix into France has provoked concern from physical media distributors. The SVoD provider has made agreements with three of the major telcos to allow the service to be streamed directly to pay TV set-top-boxes (STBs). With more than five million STBs installed, Netflix gains access to consumers who are familiar with on demand consumption through their IPTV STBs. IHS forecasts Netflix will grow to 2.1 million subscribers by 2018, despite a difficult rights windowing policy for SVoD in France. Against this back drop IHS forecast a decline of 48% in the total physical market between 2014 and 2018, with units sold to consumers falling to 32.4 million at a CAGR of 15%. IHS expects that the French SVoD market will be worth 66% of the physical market by 2018.

IHS forecasts that DVD sales will continue decline more rapidly than BD; with the number of DVD units sold expected to fall to 24.4 million or 46% against 2014. DVD will, however, continue to be the dominant physical format; outselling BD by 3:1 and raising consumer spending of €279.5 million. The average consumer price is expected to remain stable around €11.50, supported by the continued importance of new release titles to physical formats.

Blu-ray Disc unit sales will continue the decline which began in 2013 with a further decline of 7.7% in 2014. Sales will continue to decline with a CAGR of -14% between 2014 and 2018 to end the forecast period with 8 million BD unit sales generating consumer spend of €150.9 million. As with DVD consumer prices BD consumer prices are expected to remain relatively stable, falling from €19.63 to €18.85.

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