Physical sales plummet as OTT, VOD surge
Joseph O'Halloran | 02-05-2014
A report from ABI Research has confirmed the on-going demise of physical disc and electronic sell-through sales, superseded by over-the-top (OTT) video-on-demand (VOD).

ABI's OTT and Multi-screen Services Market Research report found that overall sales and worldwide VOD rentals (OTT and pay-TV operator), (EST) and DVD/Blu-ray disc sales are expected to grow 40% from 2013 to 2019, from $30.6 billion to over $43 billion. Yet drilling deeper, the research forecasts physical media sales to continue their decline, while OTT VOD services and ad-based viewing take significant market share from combined physical purchases and EST.

"New content windowing strategies, such as early VOD and EST release dates, will continue to push consumers to these distribution channels," explained ABI senior analyst Michael Inouye. "In addition as pay-TV operators increasingly pursue OTT initiatives the consumers will further migrate to digital distribution."

Despite its accelerated decline, ABI believes that physical media will actually still play a significant role for many consumers, particularly for those who have extensive DVD/Blu-ray libraries, purchase 4KTVs and want higher quality video than HDTV streaming services, or simply prefer having a copy in hand.

"As consumers move to digital distribution the wildcard in this transition remains the pay-TV operators who, for the time being, still hold the most bargaining power for content rights," added practice director Sam Rosen. "How these operators approach multiscreen services will dictate how well these players retain control over when, where, and how consumers watch video. Recent activity in OTT services and content purchases from operators like AT&T, Verizon and Dish offer a glimpse into how these incumbents are working to move with consumers as viewing behaviour changes."