VOD, SVOD... A study on new digital distribution platforms examines how they can be a driver of growth for French and European cinema.
Unifrance has commissioned EY to carry out a study, published today, into the new markets for French and European cinema, at a time when video-on-demand (VOD) and subscription video-on-demand (SVOD) are taking off. The aim of this study is to analyze the economic potential of French and European films on these new digital distribution platforms across 10 territories (USA, United Kingdom, Germany, Italy, Spain, Poland, Japan, China, Brazil et Africa), and to put forward recommendations to fully profit from the opportunities this new market presents.
In 2020, the potential of the VOD and SVOD market over the 10 territories studied, taking into account films from all origins, is estimated at €13bn (2/3 of the overall market), which leads to an estimate for the worldwide market of €20bn.
What are the opportunities for French and European cinema?
In a globally favorable context, the EY study estimates that the international market for VOD and SVOD will reach €75m in 2020. Today, revenues from VOD and SVOD are not very significant for French sales companies, accounting for less than 5% of their revenue from export . For them, like their fellow European sales companies, seizing the opportunities offered by the new digital distribution platforms is a key challenge.
For Jean-Paul Salomé, President of UniFrance films, "It is important for French producers and sales companies to anticipate the future revenues from VOD and SVOD to position themselves in this sector, the development of which will be essential to the growth of cinema."
VOD and SVOD: a worldwide market worth €8 billion
The total market for new digital platforms in the territories covered by the EY study amounted to €8bn in 2013.
The United States accounted for more than half (59%) of this market, worth €4.7bn. In this territory, the share of the digital market now outstrips the share of physical video, signaling that the shift towards digital distribution is well underway. Perhaps more significantly, since 2012, it has been SVOD services, and therefore streaming, which has been driving the growth in on-demand video, reaching a market share of 53% in the first half of 2014.
Given the preponderant position of the United States, the development of French and European films on the main US platforms remains an important issue. In fact, the market for French films on Netflix, Hulu Plus and iTunes currently varies between 2% and 5%.
In this context, the European market, which represents 24% (€1.9bn) of the overall market, offers essential capacity for development.
In Europe, while the share of digital video services is increasing significantly (up 43% between 2012 and 2013), the market for physical video still accounts for 80% of the market. However, similar to in the United States, one can note that among digital platforms, SVOD services are growing much faster, with annual growth of 126% between 2009 and 2013.
Danielle Attias, Senior Manager at EY, made a series of recommendations based on the study findings. “There are several levers which could contribute to developing access to the legal offer for a growing number of users on a global scale, such as supporting promotional efforts for VOD/SVOD services, adapting public aid for export, and studying new distribution models according to the specifics of each market,” she said.