Online VOD revenues grow 60% in Europe

Coin for pay TV VOD services rises 20%

LES ARCS, France — Revenues from movies on video-on-demand platforms online went up 60% to an estimated Euros 310 million ($410 million) across Europe this year, with the U.K., France and Germany repping two-thirds of revenues.

Revenues for movies on pay TV providers’ on-demand services reached $861 million, a 20% year-on increase, according to IHS Screen Digest.

Europe is still way behind the U.S., where the pay TV on-demand sector for movies is worth about $1.2 billion, and the online movie market worth about $728.5 million.

Figures were unveiled during a Europa Distribution workshop at Les Arcs European Film Festival, which was moderated by Spanish digital rights specialist Ricardo Torres, and gathered indie distribs who shared their experiences with VOD.

In Italy and Spain, the non-subscription online and pay TV movie sector is lagging behind because of low broadband infrastructure and low pay TV penetration.

While a few local players have fared well, big international providers like Apple and Microsoft are the top two online VOD providers across most European territories, said the panelists.

“Stand-alone online video providers hoping to compete against these big international players will have a tough time: in the (per-per-view) sector, film rights are not exclusive, so it’s very difficult to get a selling point over your competitors just through content alone,” said Richard Broughton, senior analyst at IHS Screen Digest.

On the other hand, pay TV operators that have been developing their own multi-screen operations are still well positioned to take advantage of the growth in movie consumption, Broughton added.

“There’s certainly plenty of room for growth in Europe,” said Torres, who nonetheless pointed out the high cost of fees for encoding — which allows distributors to make their content available on VOD platforms — have been a burden for independent distributors.

IHS Screen Digest forecasts the online movie market will likely grow by 60% to 70% in the next five years.

“There are a couple of big factors that are going to drive the movie market in Europe. One of those is the infrastructure: there’s still half of the households that can be upgraded to broadband in many markets; and on the pay TV side, the continuing rollouts of IPTV and cable and satellite video-on-demand services,” said Broughton.

However, while VOD revenues have been growing significantly, they still don’t make up for the decline in total sales of DVDs and Blu-ray discs, which generated $4.6 billion this year, and is expected to decline 60% through 2016.

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