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Music and Video Purchasing - UK - August 2014

“Blu-ray discs have no niche to fill. Had digital streaming or transmission services not evolved so quickly, Blu-ray would have been the natural successor to DVD; high quality physical content, slowly becoming the de facto industry standard. However, the next quality barrier has already reached the market – 4K – and all relevant market players seem to be looking to digital distribution for their content.”
– Samuel Gee, Senior Technology and Media Analyst

This report answers the following questions:

  • Will Blu-ray sales become a market defining metric?
  • Will digital music sales be sacrificed to streaming services?

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Table of contents

  1. Introduction

      • Definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Forecast value of total music sales, 2009 – 19
              • Figure 2: Forecast value of total video sales, 2009 – 19
            • Market factors
              • Continued growth in major streaming services
                • Download sales could eventually impact on streaming alternatives
                  • Conflicts and mergers between old and new media
                    • Market innovations
                      • The consumer
                        • Purchase of music
                          • Figure 3: Consumer music purchases, April 2014
                        • Purchase of video
                          • Figure 4: Consumer video purchases, April 2014
                          • Figure 5: Whether consumers who have only purchased digital media in the last three months had considered purchasing physical media, April 2014
                        • Devices used to consume music/video
                          • Figure 6: Devices used to watch video content, April 2014
                          • Figure 7: Devices used to listen to music content, April 2014
                        • Factors that would make consumers purchase music and video streaming
                          • Figure 8: Factors that would convince consumers to purchase streaming service access after a free trial, April 2014
                        • What we think
                        • Issues and Insights

                            • Will Blu-ray sales become a market defining metric?
                              • The facts
                                • The implications
                                  • Will digital music sales be sacrificed to streaming services?
                                    • The facts
                                      • The implications
                                      • Trend Application

                                          • Trend: Many Mes
                                            • Trend: Experience is All
                                            • Market Drivers

                                              • Key points
                                                • Continued growth in major streaming services
                                                  • Figure 9: Paid and free Spotify users, worldwide, March 2011 – May 2014
                                                  • Figure 10: Paid and free Netflix streaming subscribers, worldwide, Q4 2002 – Q4 2013
                                                • Download sales could start falling to streaming alternatives
                                                  • YouTube causes industry concern with tough approach to streaming
                                                    • Disney’s purchase of YouTube studio demonstrates power of new media
                                                      • Conflict appears between ISPs and video streaming providers
                                                        • Figure 11: Netflix UK ISP speed index, June 2014
                                                    • Who’s Innovating?

                                                      • Key points
                                                        • Google runs “live music” ad break
                                                          • Chromecast brings video streaming services to “dumb” TVs
                                                            • Bop.fm
                                                              • PingTune merges messages and music
                                                              • Market Size, Segmentation and Forecast

                                                                • Key points
                                                                  • Both music and video markets showing positive growth
                                                                    • Figure 12: Value of music sales, 2009-19
                                                                    • Figure 13: Value of video sales, 2009 – 19
                                                                  • Forecasts
                                                                      • Figure 14: Forecast value of total music sales, 2009 – 19
                                                                      • Figure 15: Forecast value of total video sales, 2009 – 19
                                                                    • 53% of video industry revenue comes from DVDs
                                                                      • Figure 16: Video market revenue and year on year changes, 2013
                                                                    • Digital music now accounts for 50% of revenue
                                                                      • Figure 17: Music industry segmentation, 2009 - 2013
                                                                  • Companies and Products

                                                                      • Amazon.com, Inc
                                                                        • Company history
                                                                          • Financials and strategy
                                                                            • Figure 18: Financial performance of Amazon PLC, 2010-12
                                                                          • Company overview
                                                                            • Financials and strategy
                                                                              • Figure 19: Financial performance of the HMV Group, 2010-12*
                                                                            • Netflix Inc
                                                                              • Company overview
                                                                                • Financials and strategy
                                                                                  • Figure 20: Financial performance of Netflix, Inc, 2009-13
                                                                                  • Figure 21: Netflix international streaming customers, 2012 and 2013
                                                                                • Spotify
                                                                                  • Company overview
                                                                                    • Financials and strategy
                                                                                      • Figure 22: Financial performance of Spotify Ltd., 2009-11
                                                                                    • Tesco
                                                                                      • Company overview
                                                                                        • Financials and strategy
                                                                                          • Figure 23: Tesco Plc: Group financial performance, 2009/10-2013/14
                                                                                        • YouTube, LLC
                                                                                          • Company overview
                                                                                            • Financials and strategy
                                                                                              • Figure 24: Financial performance of Google, Inc., 2010-2012
                                                                                          • The Consumer – Purchase of Music

                                                                                            • Key points
                                                                                              • Equal proportions of consumers purchase physical and digital music
                                                                                                • Figure 25: Consumer music purchases, May 2014
                                                                                              • Streaming behaviour could indicate download overtake
                                                                                                  • Figure 26: purchase of digital music, by age, May 2014
                                                                                                • Four in ten physical music buyers have never purchased digital music
                                                                                                  • Figure 27: Music purchasing, May 2014
                                                                                                  • Figure 28: Consumers who have never purchased physical or digital music, by age, May 2014
                                                                                                  • Figure 29: purchase of vinyl music in the last three months, May 2014
                                                                                                • Streamers most likely to buy physical music
                                                                                                  • Figure 30: Proportion of digital music purchasers who have also purchased physical music in the last three months, May 2014
                                                                                                  • Figure 31: Proportion of streaming music subscribers who have also purchased digital tracks and albums in the last three months, May 2014
                                                                                              • The Consumer – Purchase of Video

                                                                                                • Key points
                                                                                                  • Blu-ray discs less commonly bought than streaming access
                                                                                                    • Figure 32: Consumer video purchases, May 2014
                                                                                                    • Figure 33: Cross-purchase of Blu-ray and DVD by consumers, May 2014
                                                                                                  • DVDs and streaming services only formats with gender equality
                                                                                                    • Figure 34: Consumer video purchases, by gender, May 2014
                                                                                                  • Streamed video users least likely digital purchasers to also buy physical media
                                                                                                    • Figure 35: Purchase of physical video in the last three months, by consumers who have purchased digital video in the last three months, May 2014
                                                                                                  • A fifth of digital buyers are lost to the market
                                                                                                    • Figure 36: Whether consumers who had only purchased digital music in the last three months had considered purchasing physical media, May 2014
                                                                                                • The Consumer – Devices Used to Consume Music/Video

                                                                                                  • Key points
                                                                                                    • Television still the primary TV/Film vehicle
                                                                                                      • Figure 37: Devices used to watch video content, May 2014
                                                                                                    • Strong drop with age for mobile device viewing
                                                                                                        • Figure 38: Film and TV show consumption on mobile devices, by age, May 2014
                                                                                                      • Music streaming through TV non-existent
                                                                                                        • Figure 39: Devices used to listen to music content, May 2014
                                                                                                    • The Consumer – Factors that Would Make Consumers Purchase Music and Video Streaming

                                                                                                      • Key points
                                                                                                        • Motivations to purchase streaming services are low
                                                                                                          • Figure 40: Factors that would convince consumers to purchase streaming service access after a free trial, May 2014
                                                                                                        • Minimal dissension between 16-24s and 25-34s
                                                                                                          • Figure 41: Agreement that a streaming service being available across all devices is more likely to lead to consumers purchasing a subscription, by age, May 2014
                                                                                                        • Early UK release tempting to students
                                                                                                          • Figure 42: Factors that would encourage consumers to pay for a streaming service after a trial month, by current working status of consumers, May 2014
                                                                                                      • Appendix – Market Size and Forecast

                                                                                                          • Figure 43: Total video sales forecast, 2014 - 2019
                                                                                                          • Figure 44: Digital video sales forecast, 2014 - 2019
                                                                                                          • Figure 45: Physical video sales forecast, 2014 - 2019
                                                                                                          • Figure 46: Total music sales forecast, 2014 - 2019
                                                                                                          • Figure 47: Digital music sales forecast, 2014 - 2019
                                                                                                          • Figure 48: Physical music sales forecast, 2014 - 2019
                                                                                                      • Appendix – The Consumer – Purchase of Music

                                                                                                          • Figure 49: Music purchased by consumers, May 2014
                                                                                                          • Figure 50: Music purchased by consumers who purchased physical music, May 2014
                                                                                                          • Figure 51: Music purchased by consumers who purchased digital music, May 2014
                                                                                                          • Figure 52: Music purchased by consumers who purchased CD albums, May 2014
                                                                                                          • Figure 53: Music purchased by consumers who purchased digital singles, May 2014
                                                                                                          • Figure 54: Music purchased by consumers who purchased digital albums, May 2014
                                                                                                          • Figure 55: Music purchased by consumers who purchased a subscription to a streaming music service, May 2014
                                                                                                          • Figure 56: Music purchased by consumers who purchased a CD single, May 2014
                                                                                                          • Figure 57: Music purchased by consumers who purchased a vinyl record, May 2014
                                                                                                          • Figure 58: Consumers who purchased physical music, by demographics, May 2014
                                                                                                          • Figure 59: Consumers who purchased digital music, by demographics, May 2014
                                                                                                          • Figure 60: Consumers who purchased CD albums, by demographics, May 2014
                                                                                                          • Figure 61: Consumers who purchased digital singles, by demographics, May 2014
                                                                                                          • Figure 62: Consumers who purchased digital albums, by demographics, May 2014
                                                                                                          • Figure 63: Consumers who purchased a subscription to a streaming music service, by demographics, May 2014
                                                                                                          • Figure 64: Consumers who purchased a CD single, by demographics, May 2014
                                                                                                          • Figure 65: Consumers who purchased a vinyl record, by demographics, May 2014
                                                                                                      • Appendix – The Consumer – Purchase of Video

                                                                                                          • Figure 66: Video purchased by consumers, May 2014
                                                                                                          • Figure 67: Video purchased by consumers, by consumers who have bought Physical Video, May 2014
                                                                                                          • Figure 68: Video purchased by consumers, by consumers who have bought Digital video, May 2014
                                                                                                          • Figure 69: Video purchased by consumers, by consumers who have bought a DVD, May 2014
                                                                                                          • Figure 70: Video purchased by consumers, by video consumers who have bought a subscription to a streaming video service, May 2014
                                                                                                          • Figure 71: Video purchased by consumers, by consumers who have bought digital video download to keep on a device, May 2014
                                                                                                          • Figure 72: Video purchased by consumers, by consumers who have bought a Blu-ray disc, May 2014
                                                                                                          • Figure 73: Video purchased by consumers, by consumers who have bought a DVD/Blu-ray box set, May 2014
                                                                                                          • Figure 74: Video purchased by consumers, by consumers who have rented digital film that expired after watching it, May 2014
                                                                                                          • Figure 75: Consumers who purchased physical video, by demographics, May 2014
                                                                                                          • Figure 76: Consumers who purchased digital video, by demographics, May 2014
                                                                                                          • Figure 77: Consumers who purchased DVDs, by demographics, May 2014
                                                                                                          • Figure 78: Consumers who purchased a subscription to a streaming video service, by demographics, May 2014
                                                                                                          • Figure 79: Consumers who purchased a digital video download to keep on a device, by demographics, May 2014
                                                                                                          • Figure 80: Consumers who purchased a Blu-ray disc, by demographics, May 2014
                                                                                                          • Figure 81: Consumers who purchased a DVD/Blu-ray box set, by demographics, May 2014
                                                                                                          • Figure 82: Consumers who rented a digital film that expired after watching it, by demographics, May 2014
                                                                                                          • Figure 83: Considerations in buying physical media by those who did not, May 2014
                                                                                                      • Appendix – The Consumer – Devices Used to Consume Music and Video

                                                                                                          • Figure 84: Devices used to listen to/watch music and video, May 2014
                                                                                                          • Figure 85: Devices used to listen to/watch music and video, by devices used to watch films, May 2014
                                                                                                          • Figure 86: Devices used to listen to/watch music and video, by devices used to watch TV episodes, May 2014
                                                                                                          • Figure 87: Devices used to listen to/watch music and video, by devices used to listen to Music singles or albums, May 2014
                                                                                                          • Figure 88: Devices used to listen to/watch music and video, by devices used to listen to Radio/Internet radio, May 2014
                                                                                                          • Figure 89: Devices used to watch films, by demographics, May 2014
                                                                                                          • Figure 90: Devices used to watch TV episodes, by demographics, May 2014
                                                                                                          • Figure 91: Devices used to listen to music singles or albums, by demographics, May 2014
                                                                                                          • Figure 92: Devices used to listen to Radio/Internet radio, by demographics, May 2014
                                                                                                      • Appendix – The Consumer – Incentives to Purchase Streaming

                                                                                                          • Figure 93: Factors that would make consumers purchase a streaming subscription at the end of a trial period, May 2014
                                                                                                          • Figure 94: Most popular music purchased by consumers, by factors that would make consumers purchase a streaming subscription at the end of a trial period, May 2014
                                                                                                          • Figure 95: Next most popular music purchased by consumers, by factors that would make consumers purchase a streaming subscription at the end of a trial period, May 2014
                                                                                                          • Figure 96: Most popular video purchased by consumers, by factors that would make consumers purchase a streaming subscription at the end of a trial period, May 2014
                                                                                                          • Figure 97: Next most popular video purchased by consumers, by factors that would make consumers purchase a streaming subscription at the end of a trial period, May 2014
                                                                                                          • Figure 98: Factors that would make consumers purchase a streaming subscription at the end of a trial period, by most popular factors that would make consumers purchase a streaming subscription at the end of a trial period, May 2014
                                                                                                          • Figure 99: Factors that would make consumers purchase a streaming subscription at the end of a trial period, by next most popular factors that would make consumers purchase a streaming subscription at the end of a trial period, May 2014
                                                                                                          • Figure 100: Most popular factors that would make consumers purchase a streaming subscription at the end of a trial period, by demographics, May 2014
                                                                                                          • Figure 101: Next most popular factors that would make consumers purchase a streaming subscription at the end of a trial period, by demographics, May 2014

                                                                                                      Companies Covered

                                                                                                      • Amazon.co.uk
                                                                                                      • Amazon.com Inc
                                                                                                      • Apple Computer UK Ltd
                                                                                                      • Bacardi & Company Limited
                                                                                                      • Best Buy Co.
                                                                                                      • Blinkbox Entertainment Ltd
                                                                                                      • Coca-Cola GB
                                                                                                      • DreamWorks Animation SKG Inc.
                                                                                                      • ESPN, Inc.
                                                                                                      • Facebook, Inc.
                                                                                                      • General Motors Corporation
                                                                                                      • Gillette UK Ltd
                                                                                                      • Google UK
                                                                                                      • HMV Retail Ltd
                                                                                                      • Hollywood Entertainment Corporation
                                                                                                      • Home Box Office, Inc.
                                                                                                      • LOVEFiLM International Ltd
                                                                                                      • McDonald's Restaurants Limited (UK)
                                                                                                      • Microsoft Corporation
                                                                                                      • Netflix, Inc.
                                                                                                      • Nintendo UK Entertainment Ltd
                                                                                                      • Reuters Group PLC
                                                                                                      • Samsung Electronics (UK) Ltd
                                                                                                      • Sony (UK) Ltd
                                                                                                      • Spotify AB
                                                                                                      • Tesco (UK)
                                                                                                      • Walmart Stores (USA)
                                                                                                      • We7
                                                                                                      • YouTube, Inc.

                                                                                                      Music and Video Purchasing - UK - August 2014

                                                                                                      US $2,478.79 (Excl.Tax)