Hopes pinned on Netflix to reboot French video and TV arena
Joseph O'Halloran
| 16 May 2014
Even though it has a generally robust pay-TV sector and excellent communications infrastructure, the French TV and video entertainment markets are set for only sluggish growth over the next four years.

Research from Futuresource Consulting 

predicts that from 2014-2018, overall TV and video entertainment spend in France is set to averaging only 1% annual growth to reach 7.9 billion.

Furthermore, in 2013 the French pay-TV VOD, box office and packaged video all posted losses, with pay-TV VOD witnessing its first annual decline, 6%, to 123 million. Box office sales declined 5% to 1.2 billion, and packaged video plummeted 17% to just under 1 billion. The analyst predicts that 2014 consumer spend will remain flat.

"France remains one of the largest pay-TV markets globally and it accounts for nearly 70% of overall video spend in France. Last year's small decline hides some considerable downswings in key entertainment segments, triggered partly by France's continuing weak economy and its effect on consumer confidence," said Joanna Wright, senior market analyst at Futuresource Consulting. "This is in contrast to its European neighbours, with the UK and Germany witnessing 4% and 7% growth respectively."

Yet despite this relatively sluggish economy and weak consumer confidence, Futuresource found that France actually had a strong year of growth in pay-TV homes, rising a further 700,000 to reach 20.4 million at the close of the year, driven primarily by the continued battle for online video subscribers. And while overall home video struggled, digital video grew 8% in 2013 to reach 233 million, lower than anticipated but 2014 is expected to improve thanks to new service launches from Orange, Netflix and Carrefour. EST and iVoD combined grew 5% reaching 65 million in 2013 driven by iTunes which dominates both categories. Google, Xbox and Sony are also present but are yet to have a significant impact. A stronger performance is expected in 2014 (11% growth to 72 million) as pricing initiatives, new EST services from Orange and possibly Carrefour and an improving economy is expected to help drive the market.

Futuresource expects total digital video spend to increase by an average of 22% each year between 2014-2018 to reach 0.6 billion. The analyst also believes that pay-TV and subscription VOD services will be the key drivers, with transactional digital video showing healthy growth but from a low base.

"SVOD witnessed impressive growth (92% to 45 million in 2013) but it remains a relatively small segment, accounting for 19% of digital video spend," Wright added. "2014 could be a big year for SVOD, there has been much speculation regarding possible European Netflix launches but it seems clear Netflix will launch in France and Germany later this year. So far SVOD has been slow to take off in France, partly due to the strength of existing pay-TV subscription services. Netflix could be the catalyst for change to help raise awareness and stimulate interest."