Global Home Entertainment Market
Datamonitor, October 2011, Pages: 121
The woes of the entertainment market continue, largely as a result of consumer reluctance to spend with entertainment retailers. A combination of piracy, free access to streaming services such as Spotify, Grooveshark, YouTube and the BBC iPlayer, and access to free apps and casual online games has reduced the value consumers attach to the ownership of entertainment products.
Scope of the report:
- Measure demand and future risk with both global and UK home entertainment expenditure split by music, video and video games plus forecasts to 2015
- Understand the strategies and benchmark performance of the major UK operators with market shares, financials, and Verdict's outlook on each
Highlights:
- The UK home entertainment market peaked in 2008 at £7.7bn, largely because of an explosion in popularity of video games across 2007 and 2008. Since that year, however, the market has continuously declined. The market was worth £6.1bn in 2011 and we forecast that it will decline by a further 1.8% in 2012.
- The global market peaked at $103.2bn (£66.5bn) in 2008 and we see continual decline to $74.3bn (£47.9bn) by 2015. The global games market is unlikely to return to the high growth rates that it enjoyed in the years after the last batch of major consoles were released
- We predict that 21.4% of UK entertainment sales will occur digitally in 2011 as a result of growing broadband penetration, faster connection speeds, increased use of mobile internet and greater online connectivity of devices such as TVs, tablets and games consoles.
Reasons to buy:
- What are the threats facing the market and how can I take full advantage of its potential?
- How have consumers and retailers reacted to recent economic turbulence and what impact will it have on the market?
- What are the business models and key performance indicators of my competitors and how can I outperform them?
EXECUTIVE SUMMARY
Summary points
Main conclusions
Market continues to plummet due to the unwillingness of consumers to pay for product
From its peak the UK market has shrunk by £1.6bn
Global market will shrink to $74.3bn in
Piracy shows no signs of abating
Digital delivery represents the future …
… with cloud operators likely to usurp streaming services
Video games continue to suffer massive declines but performance should begin to improve in
Video market in long term decline
Music retail sector changing beyond recognition
Online players continue to win …
… with the high street in decline
Mobile remains a growth area
KEY ISSUES
Cloud-based services the future of home entertainment
What is it?
Cloud service operators
Cloud services in video
Cloud services in gaming
Subscription, streaming and bundle services
Future of the high street
Piracy
Faster broadband and improved technology makes it easier to download illegally
Different release dates by country spurs piracy on
How retailers can fight back
GLOBAL HOME ENTERTAINMENT MARKET AND OUTLOOK
Global home entertainment market will continue to fall in value
Games market can no longer depend on console cycle
Video market is moving away from content ownership
Music retail will continue to suffer as consumers move to service based consumption
UK MARKET ANALYSIS
Market definition
Consumers no longer see value in the entertainment retail market
Entertainment market shares
Forecast for UK home entertainment market
Video games
New forms of gaming take increasing share of market
Digital games sales begin to take off at expense of store-based sales
Video game market shares
Forecast for video game market – new technology and download sales will lead recovery
Video
Performance worsens due to streaming and on demand services
Instore purchasing in long term decline
Video market shares
Forecast for video market
Piracy and growth of on demand and streaming services will see market face even tougher conditions
Music
Value of market continues to plummet
Sales of physical products through stores are disappearing
Music market shares
Forecast for music market
Channels of distribution
Pureplay online players gain at expense of all other channels
Online will gain further from digital downloading
Grocers share slips back as spend transfers online
Mail order outdated and in terminal decline
Specialists face struggle for survival
Multiples stabilise but at low levels
HOME ENTERTAINMENT VIA M-COMMERCE – MARKET ANALYSIS
Smartphones and tablets create opportunities
High proportion of mobile phone owners have downloaded music or video at some point
Consumers aged 20–34 more likely to shop via their mobile phones
Small but significant proportion of 18–24 year olds have watched films or TV on their phones
Shoppers for music and film via mobile phone desire low prices and convenience
Significant proportion of consumers have played games on their mobile phone
Shoppers for video games via mobile phone extremely price-focused
Cheaper, more widely available mobile broadband access will drive growth in m-commerce entertainment
Argos most visited retailer by online music & video shoppers via their mobile phones
Apps
9.5% of music & video shoppers have downloaded a retailer's app
Apple dominates apps market
Developers must monetise more effectively
In the long term the apps market is likely to look radically different
Consumer expenditure on apps is concentrated
Entertainment apps require companies to be innovative
CONSUMER DATA
Methodology of data
Overall
Visitor share at lowest level since 2001
Profiles – % breakdowns
Shoppers aged between 16 and 24 make up the greatest share of music & video shoppers
- Amazon
Increases visitor share
Range overtakes convenience as the second strongest driver of growth
- Asda
Third consecutive rise in footfall
Price main driver of loyalty
- HMV
Visitor share falls after three years of growth
Loyalty flat year-on-year but range, ambience and facilities show uplifts
iTunes
Launch of iPad and upgrade of iPhone drive growth
Loyalty flat on previous year
- Play.com
Visitor share declines for the first time
Lower convenience score drags down loyalty despite appreciation of its prices
-Tesco
Falls back after strong uplift
Convenience gets a boost …
… but range scores even more poorly
AMAZON
Exceptional performance
Recent key events
Broadens offer
Proposition
Financials
Sales growth remains impressive
Sales speed up in Q2
Sector performance – Entertainment
Entertainment sales mix
Market shares
Outlook
GOOGLE INC
Meteoric rise
Recent key events
Enters video rental market
Launches Google TV
Launches Google Music
Proposition
Sector performance – Home entertainment
Music
Video
Video games
Outlook
Google may have to consider paid-for music services
Needs more premium content to succeed in video rental
More manufacturers will integrate Google's platform into TVs
ITUNES
Holds a strong competitive advantage
Recent key events
Broadens offer
Proposition
Sector performance – Home entertainment
Sales growth remains impressive
Market shares
Video
Music
Outlook
Good position for the future
SPOTIFY
Move into US boosts coverage
Recent key events
US expansion finally launched
Amount of free music available is reduced
Joins forces with Shazam
Proposition
Outlook
Future difficult as piracy continues and availability of cloud services increases …
APPENDIX
Definitions
Abbreviations
Methodology
Ask the analyst
Global Retail FreeView
Verdict consulting
Disclaimer
TABLES
Table: Amazon cloud proposition
Table: Apple iCloud and iTunes Match service proposition
Table: Audio Box cloud service proposition
Table: Google music service proposition
Table: Comparison of cloud services vs subscription/streaming services
Table: Global home entertainment market size $bn 2007–10
Table: Global home entertainment market forecast $bn 2010–15e
Table: Market size of games retailing including downloads $bn 2007–10
Table: Forecast of games retailing market including downloads $bn 2010–15
Table: Market size of retail video $bn 2007–10
Table: Forecast of video retail market including downloads $bn 2010–15
Table: Market size of music retail $bn 2007–10
Table: Forecast of music retail market including downloads $bn 2010–15
Table: UK home entertainment market size 2002–12e
Table: UK home entertainment market shares % 2007–12e
Table: Video games market size 2002–12e
Table: Video game market shares 2007–12e
Table: Video market size 2002–12e
Table: Video market shares 2007–12e
Table: Music market size 2002–12e
Table: Music market shares 2007–12e
Table: Amazon drivers of loyalty
Table: Asda drivers of loyalty
Table: HMV drivers of loyalty
Table: iTunes drivers of loyalty
Table: Play.com drivers of loyalty
Table: Tesco drivers of loyalty
Table: Amazon company overview
Table: Amazon retail proposition
Table: Amazon global key operating statistics 2006–
Table: Amazon global trading update
Table: Amazon sales by business segment Q1 & Q2
Table: Google company overview
Table: Google retail proposition
Table: iTunes company overview
Table: iTunes retail proposition
Table: Spotify company overview
Table: Spotify proposition
FIGURES
Figure: Music subscription operators
Figure: Future of home entertainment retail compared to
Figure: Role of vending machines in home entertainment
Figure: Drivers and inhibitors of piracy
Figure: Breakdown of UK home entertainment market by sub sector 2007–12e
Figure: Digital penetration of UK home entertainment market 2007–12e
Figure: UK home entertainment digital sales by sub sector 2007–
Figure: UK home entertainment market size 2010–15e
Figure: Hardware/Software split of video games market 2008 and
Figure: Forecast video game sales split by digital, online and instore 2010–
Figure: Video game market size 2010–15e
Figure: Forecast video sales split by digital, online and instore 2010–
Figure: Video market size 2010–15e
Figure: Forecast music sales split by digital, online and instore 2010–
Figure: Music market size 2010–
Figure: Percentage point changes in entertainment channel shares 2012e on
Figure: Online shares of home entertainment 2007–12e
Figure: Grocers share of entertainment market 2007–12e
Figure: Mail order shares of entertainment market 2007–12e
Figure: Specialists channel entertainment shares 2007–12e
Figure: Multiples channel entertainment shares 2007–12e
Figure: Music & video m-commerce market size 2009–12e
Figure: Frequency of music & video purchasing via mobile phones
Figure: Adults using their mobile phones for shopping – penetration by age and gender
Figure: Shoppers watching films or TV on their mobile – penetration by gender and age
Figure: Consumer motivation for purchasing music/film via a mobile phone
Figure: Shoppers playing games on their mobiles – penetration by gender and age
Figure: Consumer motivation for purchasing video games via mobile 2011 (% mentioning)
Figure: Reasons cited for not shopping via a mobile 2010 (% mentioning)
Figure: Entertainment retailers most visited by shoppers via mobile 2010 (% mentioning)
Figure: Proportion of music & video shoppers downloading a retailer's shopping app
Figure: Apple online apps store
Figure: Apple categories of apps
Figure: Music & video share of shoppers 2007–
Figure: Profile of music & video shoppers – by gender 2007–
Figure: Profile of music & video shoppers – by age bracket (%) 2007–
Figure: Profile of music & video shoppers – by socioeconomic class 2007–
Figure: Amazon visitor share 2007–
Figure: Amazon visitor share by demographic group
Figure: Asda visitor share 2007–
Figure: Asda visitor share by demographic group
Figure: HMV visitor share 2007–
Figure: HMV visitor share by demographic group
Figure: iTunes visitor share 2007–
Figure: iTunes visitor share by demographic group
Figure: Play.com visitor share 2007–
Figure: Play.com visitor share by demographic group
Figure: Tesco visitor share 2007–
Figure: Tesco visitor share by demographic group
Figure: Amazon logo
Figure: Amazon global sales and growth to December 2006–11e
Figure: Amazon global operating profit to December 2006–11e
Figure: Amazon UK entertainment sales mix 2007–12e
Figure: Amazon UK entertainment sales incl VAT 2007–
Figure: Amazon UK entertainment market shares 2007–
Figure: Amazon UK music sales incl VAT 2007–
Figure: Amazon UK music market share 2007–
Figure: Amazon UK video sales incl VAT 2007–
Figure: Amazon UK video market share 2007–
Figure: Amazon UK video games sales incl VAT 2007–
Figure: Amazon UK video games market share 2007–
Figure: Google logo
Figure: iTunes logo
Figure: iTunes entertainment sales mix 2007–12e
Figure: iTunes entertainment sales incl VAT for calendar years 2007–12e
Figure: iTunes UK home entertainment market share 2007–12e
Figure: iTunes video sales incl VAT for calendar years 2007–12e
Figure: iTunes video market shares 2007–12e
Figure: iTunes music sales incl VAT for calendar years 2007–12e
Figure: iTunes music market shares 2007–12e
Figure: Spotify logo
Figure: Spotify's registered users
- 7-Eleven Inc.
- Apple Inc.
- Arvedi Group
- Bonnier AB
- CMS Energy Corporation
- Currys
- Google Inc.
- HMV Group plc
- Hutchison 3G UK Limited
- J Sainsbury plc
- Microsoft Corporation
- Motorola Solutions Inc.
- Royal KPN N.V.
- Schindler Holding Ltd.
- Time Warner Inc.
- Wm Morrison Supermarkets Plc
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