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Streaming Media - UK - February 2015

“Device and service integration is only likely to become a bigger topic for streaming brands in 2015, as consumers give more consideration to compatibility with their ever-evolving ecosystem, something which could be an advantage to brands that control the operating systems that will bring devices and apps together.”
– Paul Davies, Senior Leisure and Technology Analyst

This report answers the following key questions:

  • Are music providers giving users enough reason to upgrade to paid-for streaming services?
  • How can streaming services become better integrated into consumers’ wider ecosystems?

Spotify and Netflix dominate the UK music and video streaming markets respectively, with almost half of paid streamers using these providers as their primary source of paid-for content.

Compatibility with the wider connected environment will become a crucial factor in the decision-making process for consumers, as they will start to seek out the service that offers the best integration with the ever-increasing set of smart devices, appliances and digital services they use and own.

In this report we analyse usage of different music and video streaming sites/applications, investigating what proportion of total streamers pay for access and also which service they use most often within each sector.

Consumers are asked about their level of satisfaction when it comes to the paid provider they use the most in both the music and video streaming markets, whilst we also look at how highly they rate different aspects of these services. Key driver analysis is used to assess the correlation between satisfaction with different service features and overall satisfaction with a paid-for music or video provider.

The consumer research also looks at ways in which people would like to discover new content or receive recommendations when using free or paid-for streaming sites/applications.  

 

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Table of contents

  1. Introduction

      • Definition
        • Exchange rates
          • Abbreviations
          • Executive Summary

              • The market
                • Video streaming subscriptions
                  • Figure 1: Forecast value of subscriptions within the UK video streaming market, 2009-19
                • Music streaming subscriptions
                  • Figure 2: Forecast value of subscriptions within the UK music streaming market, 2009-19
                • Companies, brands and innovation
                  • Market share
                    • Figure 3: Music subscription revenues, Spotify and total industry, 2012 and 2013
                  • Netflix more than twice as popular as nearest rival
                    • Figure 4: Number of Netflix subscribers, worldwide, Q4 2002-Q4 2014
                  • Who’s innovating?
                    • The consumer
                      • Half of consumers stream music online
                        • Figure 5: Usage of music streaming services, November 2014
                      • Only a quarter of music streamers pay for access
                        • Figure 6: Participation in paid-for music streaming, November 2014
                      • Nearly half of paid users use Spotify as their main source
                        • Figure 7: Usage of paid-for music streaming services, November 2014
                      • YouTube and catch-up TV services lead the way
                        • Figure 8: Usage of video streaming services, November 2014
                      • A third of video streamers access paid content
                        • Figure 9: Participation in paid-for video streaming, November 2014
                      • Netflix enjoys domination of paid video sector
                        • Figure 10: Usage of paid-for video streaming services, November 2014
                      • Nine out of 10 listeners happy with their paid-for service
                        • Figure 11: Users’ satisfaction with paid-for music streaming services, November 2014
                      • Spotify’s users may listen in to rivals’ sound quality
                        • Figure 12: Users’ satisfaction with aspects of paid-for music streaming services, November 2014
                      • Paid video streaming services equally well received
                        • Figure 13: Users’ satisfaction with paid-for video streaming services, November 2014
                      • Alternative package options could challenge Netflix’s dominance
                        • Figure 14: Users’ satisfaction with aspects of paid-for video streaming services, November 2014
                      • Media providers can support self-discovery of content
                        • Figure 15: Attitudes towards discovering music and video content, November 2014
                      • What we think
                      • Issues and Insights

                          • Are music providers giving users enough reason to upgrade to paid-for streaming services?
                            • The facts
                              • The implications
                                • How can streaming services become better integrated into consumers’ wider ecosystems?
                                  • The facts
                                    • The implications
                                    • Trend Application

                                        • Trend: Make it Mine
                                          • Trend: Click and Connect
                                            • Mintel Futures: East Meets West
                                            • Market Drivers

                                              • Key points
                                                • Viewers continue to swap discs for digital delivery
                                                  • Figure 16: Video market revenue and year-on-year changes, 2013
                                                • Digital accounted for half of music sales in 2014
                                                  • Figure 17: Consumer spending on music, physical formats vs digital, 2005-14
                                                • Tensions erupt between music providers and producers
                                                  • Boosted broadband helps 4K streaming to become a reality
                                                    • Figure 18: UK residential broadband connections, by headline speed, May 2010-May 2014
                                                  • Mobile coverage widens but streaming is data-hungry
                                                    • Figure 19: 3G and 4G coverage in the UK, by mobile network provider, June and October 2014
                                                  • Commoditisation of smart TVs will lift VoD
                                                    • Figure 20: Devices used to watch TV programmes and films via stream or download, August 2014
                                                  • Streaming a perfect match for Millennials…
                                                    • Figure 21: Online activities done in the last three months, by generation, October 2014
                                                  • …but older consumers prefer to tune in to live content
                                                    • Listening
                                                      • Figure 22: Proportion of listening activities, by age, 2014
                                                    • Viewing
                                                      • Figure 23: Proportion of watching activities, by age, 2014
                                                    • How does video streaming stand up against pay-TV?
                                                      • Figure 24: Perceptions of pay-TV services vs paid-for video streaming services, August 2014
                                                  • Who’s Innovating?

                                                    • Key points
                                                      • Personalisation comes to the fore
                                                        • Finding the perfect partner
                                                          • Media services ‘go editorial’
                                                            • Spotify looks to introduce a middle-tier subscription
                                                              • Streaming brands embrace retro formats
                                                              • Market Size and Segmentation

                                                                • Key points
                                                                  • Subscription VoD to become a £1 billion industry
                                                                    • Figure 25: Value of subscriptions within the UK video streaming market, 2009-19
                                                                  • Music subscription revenues rose by 65% in 2014
                                                                    • Figure 26: Value of subscriptions within the UK music streaming market, 2009-19
                                                                  • Forecasts
                                                                    • Video streaming subscriptions
                                                                      • Figure 27: Forecast value of subscriptions within the UK video streaming market, 2009-19
                                                                    • Music streaming subscriptions
                                                                      • Figure 28: Forecast value of subscriptions within the UK music streaming market, 2009-19
                                                                    • Forecast methodology
                                                                    • Market Share

                                                                      • Key points
                                                                        • Spotify dominates UK music subscription market
                                                                          • Figure 29: Music subscription revenues, Spotify and total industry, 2012 and 2013
                                                                        • Only one in four global Spotify users subscribe
                                                                          • Figure 30: Number of Spotify free and paid active users, worldwide, March 2011-December 2014
                                                                        • Netflix more than twice as popular as nearest rival
                                                                          • Figure 31: Number of Netflix subscribers, worldwide, Q4 2002-Q4 2014
                                                                      • Companies and Products

                                                                        • Key points
                                                                          • Amazon.com, Inc
                                                                            • Company history
                                                                              • Financials
                                                                                • Figure 32: Financial performance of Amazon.com, Inc, 2012 and 2013
                                                                              • Recent activity and strategy
                                                                                • British Broadcasting Corporation (BBC)
                                                                                  • Company history
                                                                                    • Financials
                                                                                      • Figure 33: Financial performance of the BBC, 2012/13 and 2013/14
                                                                                    • Recent activity and strategy
                                                                                      • Google Inc.
                                                                                        • Company history
                                                                                          • Financials
                                                                                            • Figure 34: Financial performance of Google Inc, 2012 and 2013
                                                                                          • Recent activity and strategy
                                                                                            • Netflix Inc.
                                                                                              • Company history
                                                                                                • Financials
                                                                                                  • Figure 35: Financial performance of Netflix Inc, 2012 and 2013
                                                                                                  • Figure 36: Netflix international streaming customers, 2012 and 2013
                                                                                                • Recent activity and strategy
                                                                                                  • Spotify Ltd
                                                                                                    • Company history
                                                                                                      • Financials
                                                                                                        • Figure 37: Financial performance of Spotify UK Ltd, 2012 and 2013
                                                                                                      • Recent activity and strategy
                                                                                                      • Brand Communication and Promotion

                                                                                                        • Key points
                                                                                                          • Sky has spent £40 million on advertising its online options
                                                                                                            • Figure 38: Advertising expenditure within the UK video streaming market, by selected advertisers, 2011-14
                                                                                                          • Spotify responds to reports of new entrants
                                                                                                            • Figure 39: Advertising expenditure within the UK music streaming market, by selected advertisers, 2011-14
                                                                                                          • BBC iPlayer nears 400,000 Twitter followers
                                                                                                            • Figure 40: Number of Twitter followers and Facebook likes, by selected video streaming providers, December 2014
                                                                                                          • Music providers lag behind video equivalents
                                                                                                            • Figure 41: Number of Twitter followers and Facebook likes, by selected music streaming providers, December 2014
                                                                                                        • The Consumer – Music Streaming Usage

                                                                                                          • Key points
                                                                                                            • Half of consumers stream music online
                                                                                                              • Figure 42: Usage of music streaming services, November 2014
                                                                                                            • Only a quarter of music streamers pay for access
                                                                                                              • Figure 43: Participation in paid-for music streaming, November 2014
                                                                                                            • Nearly half of paid users use Spotify as their main source
                                                                                                              • Figure 44: Usage of paid-for music streaming services, November 2014
                                                                                                            • Streaming tails off with age as older consumers prefer to own music
                                                                                                              • Figure 45: Usage of music streaming services, by age, November 2014
                                                                                                          • The Consumer – Video Streaming Usage

                                                                                                            • Key points
                                                                                                              • YouTube and catch-up TV services lead the way
                                                                                                                • Figure 46: Usage of video streaming services, November 2014
                                                                                                              • A third of video streamers access paid content
                                                                                                                • Figure 47: Participation in paid-for video streaming, November 2014
                                                                                                              • Netflix enjoys domination of paid video sector
                                                                                                                • Figure 48: Usage of paid-for video streaming services, November 2014
                                                                                                              • Dynamic bundles could appeal most to Millennials
                                                                                                                • Figure 49: Usage of video streaming services, by generation, November 2014
                                                                                                            • The Consumer – Perceptions of Streaming Services

                                                                                                              • Key points
                                                                                                                • Nine out of 10 listeners happy with their paid-for service
                                                                                                                  • Figure 50: Users’ satisfaction with paid-for music streaming services, November 2014
                                                                                                                • Spotify’s users may listen in to rivals’ sound quality
                                                                                                                  • Figure 51: Users’ satisfaction with aspects of paid-for music streaming services, November 2014
                                                                                                                • Paid video streaming services equally well received
                                                                                                                  • Figure 52: Users’ satisfaction with paid-for video streaming services, November 2014
                                                                                                                • Alternative package options could challenge Netflix’s dominance
                                                                                                                  • Figure 53: Users’ satisfaction with aspects of paid-for video streaming services, November 2014
                                                                                                                • Key driver analysis
                                                                                                                  • Key drivers
                                                                                                                    • Key driver methodology
                                                                                                                      • Key drivers: Music streaming
                                                                                                                        • Figure 54: Key driver analysis of overall satisfaction with paid-for music streaming service used most often, November 2014
                                                                                                                        • Figure 55: Key driver analysis of overall satisfaction with paid-for music streaming services, November 2014
                                                                                                                      • Key drivers: Video streaming
                                                                                                                        • Figure 56: Key driver analysis of overall satisfaction with paid-for video streaming service used most often, November 2014
                                                                                                                        • Figure 57: Key driver analysis of overall satisfaction with paid-for video streaming services, November 2014
                                                                                                                      • Key drivers: Music and video comparisons
                                                                                                                        • Figure 58: Comparison of key driver analysis of overall satisfaction with paid-for music streaming services and video streaming services, November 2014
                                                                                                                    • The Consumer – Content Discovery

                                                                                                                      • Key points
                                                                                                                        • Media providers can support self-discovery of content
                                                                                                                          • Figure 59: Attitudes towards discovering music and video content, November 2014
                                                                                                                        • One size does not fit all
                                                                                                                          • Figure 60: Agreement with statements about discovering music and video content, by age, November 2014
                                                                                                                        • Data sharing requires clear value exchange
                                                                                                                          • Figure 61: Agreement with statements about discovering music and video content, by paid music and video streamers, November 2014
                                                                                                                      • Appendix – Market Size and Segmentation

                                                                                                                          • Figure 62: Best- and-worst-case forecasts for value of subscriptions within the UK video streaming market, 2014-19
                                                                                                                          • Figure 63: Best- and-worst-case forecasts for the value of subscriptions within the UK music streaming market, 2014-19

                                                                                                                      Companies Covered

                                                                                                                      • Amazon.com Inc
                                                                                                                      • British Broadcasting Corporation (BBC)
                                                                                                                      • DreamWorks Animation SKG Inc.
                                                                                                                      • Facebook, Inc.
                                                                                                                      • Google, Inc.
                                                                                                                      • LOVEFiLM International Ltd
                                                                                                                      • Motorola Mobility Holdings
                                                                                                                      • Netflix, Inc.
                                                                                                                      • PricewaterhouseCoopers
                                                                                                                      • Vodafone Distribution Ltd - UK Retail
                                                                                                                      • Weinstein Company (The)
                                                                                                                      • YouTube, Inc.

                                                                                                                      Streaming Media - UK - February 2015

                                                                                                                      £1,995.00 (Excl.Tax)