- French consumer spending on buying physical video will fall 13.1% in 2016, a decline of 0.8 percentage points more than in 2015.
- This is despite the April 2016 release of Star Wars: The Force Awakens, which mitigated first half declines, especially on Blu-ray Disc (BD).
- The impact of UHD on this year will become apparent after the UEFA European (soccer) Championship in June/July 2016.
IHS has revised its French retail physical video forecasts for 2016 through to 2020 on the basis of Q1 2016 data from French audiovisual authority Centre National du Cinéma (CNC) and feedback received from industry sources. Historical figures for 2014 and 2015 have also been adjusted marginally upwards, in line with revised market data published by the CNC.
Sales of video discs fell to 48.4m units in 2015, down from 52.5m units a year before, a decline of 7.7%, according to the CNC. Consumer spending on physical retail fell to €707.6m from €807.0m, an annual decline of 12.3%. Of the total sales, DVD accounted for 40m units, down 8.0% from 43.5m. Consumer spending on DVD declined to €536.4m, down 13.2% from €618.2m. Sales of Blu-ray Disc (BD) accounted for 8.4m unit sales, down from 9.0m (-6.3%) and for €171.2m in consumer spending, down from €188.8m in the previous year (-9.3%).
In Q1 2016 the market continued to decline in terms of consumer spending. This was despite the release of Star Wars: The Force Awakens at the beginning of the second quarter, which reportedly mitigated the downward trend, especially for BD. Nonetheless, IHS expects the French physical retail market to decline even more rapidly in 2016 than 2015, with volume sales expected to fall by 11.4% to 42.9m units by the end of the year, and consumer spending by 13.1% to €614.6m. Both formats are expected to record a similar decline in volume terms (11.5% for DVD to 35.4m units and 11% for BD, to 7.5m). However, a steeper fall in average DVD prices means spending on the older format is expected to decline 14.0% to €461.3m, compared with a 10.5% decline in BD spending (to €153.3m).
By 2020, IHS expects physical video sales in France to generate 29m retail unit sales and €382.2m in consumer spending. These figures represent a compound annual decline of 9.3% and 11.2% respectively over the forecast period. DVD will continue to dominate, accounting for 23.9m of unit sales (82.5%) and for €281.1m of spending (73.7%) by 2020, a compound decline of 9.4% and 11.7% respectively. BD will account for 5.1m unit sales and €101.1m of consumer spending, a compound yearly decline of 9.2% and 9.9% respectively.
This year physical video markets in many territories have benefitted from the popularity of Star Wars: The Force Awakens, which was released on physical media in France at the beginning of the second quarter. The title was slightly more popular on the BD format, which accounted for 51% of sales in the first seven weeks according to IHS research. Star Wars is an exceptional title and is believed to have generated additional spending on physical media by consumers. The extent of decline that was observed for the year to date (up to the end of May), of -9.8% in volume and -13% in value, is therefore expected to worsen over the full year.
The penetration of Ultra-High Definition Blu-ray Disc (UHD) may boost consumer spending on BD, potentially as early as this year. More titles are becoming available on the format which is essential to the growth of its popularity. However, the true impact of UHD for this year will only become apparent after the end of the UEFA European Championship this summer 2016. The popularity of 4K TV sets has gained momentum as a result of the soccer tournament, and the growing of penetration of this format suggests that UHD Blu-ray may have a significant influence on the physical video market in the following years. IHS expects 4K TV units to account for 28% of total TV sales in Western Europe in 2016, and for 40% in 2017.
IHS expects the decline in physical media sales to gradually start plateauing from 2018 onwards, at which point BD will perform significantly better than DVD. In 2020, the decline for BD in terms of consumer spending is forecast at 6%, and for DVD at 9%. Average unit prices for physical media will continue to decline over the forecast period, but at a slower rate than was seen in the previous few years. This is partly explained by the likely discontinuation of the aggressive price reductions seen in recent years, as this strategy has proven to be ineffective in curbing the decline of the market up to the present point. Also, the price reduction will be more significant for DVD than for BD, as the growing popularity of UHD sales will help maintain average prices for Blu-ray Discs.