We forecast the Australian video market to remain flat at about A$5.8bn through to 2023 even as the mix of revenues and consumption changes from traditional video to digital video platforms.

While we don’t expect the size of the video entertainment market to change materially, we forecast household spending on video to decline gradually driven primarily by the revenue deflation from traditional to digital platforms.

The launch of multiple new SVOD platforms in 2019 and 2020 will increase the competitive pressures on traditional platforms and accelerate the shift away from linear viewing.

Pay-TV will remain under pressure driven by the structural changes in the way video content is consumed and while Foxtel will offset some of this pressure by participating in the SVOD market, it will not be able to stem the losses in its traditional Pay-TV business.

Technology has rendered much of the physical media industry obsolete as consumers move away from renting and storing movie content on DVD and Blu-ray discs, to digital formats.

Cinema revenues are projected to decline gradually primarily due to cheaper substitutes on offer for consumers.

Contents

Executive Summary

Summary

• Average household spend on Video Entertainment to decline driven by the shift to streaming platforms
• Digital continues to grow with overall market remaining flat through to 2023

Premium Pay-TV

• Foxtel continues to face structural hurdles even as new SVOD players with deeper pockets emerge and the impact of cannibalisation grows

Premium Pay-TV – Kayo and the risks of cannibalisation

• Rise of sports streaming apps and 5G could threaten the dominance of Foxtel in Live Sports

SVOD

• The SVOD market is set for a renewed bout of competitive intensity driven by the entry of multiple new players
• Netflix to remain the largest SVOD player but will face increasing competition from new players such as Disney+

TVOD/EST

• Growth to continue but mix likely to change

Physical Media

• The ubiquity of streaming platforms will accelerate the decline of physical media

Cinema

• Revenues are projected to decline gradually over the next 5 years primarily due to cheaper substitutes on offer for consumers

Glossary

Methodology and Definitions

List of charts/tables

Figure 1. Household spending on video entertainment

Figure 2. Video revenues by platform (A$m)

Figure 3. Video industry revenue forecasts by platform (A$m)

Figure 4. SVOD pricing by platform (A$ per month)

Figure 5. Foxtel EBITDA (A$mn)

Figure 6. Premium Pay-TV forecasts (excluding advertising)

Figure 7. Will Kayo cannibalise Foxtel?

Figure 8. Rising competition in sports streaming

Figure 9. SVOD revenue and pcp growth (A$mn, %)

Figure 10. SVOD forecasts

Figure 11. SVOD subscriber market share (%)

Figure 12. Original content spending – Netflix vs Disney (US$bn)

Figure 13. TVOD/EST forecast (A$mn)

Figure 14. TVOD/EST revenue mix (%)

Figure 15. Physical Media forecasts

Figure 16. Number of Video Releases on DVD, VHS and Blu-Ray

Figure 17. Cinema revenues, FY17 – FY23 (A$mn)

Figure 18. Admissions per Capita (2006-2018)