Netflix German launch to drive video revenues to €7.4BN by 2018
Details
Joseph O'Halloran
| 19 September 2014
Research from Futuresource Consulting
 is predicting total consumer 
spend on video entertainment in Germany will increase 2% in 2014 to over €6.9 billion and will reach €7.4 billion by 2018.


Even though this compares with 5% growth in 2013, the analyst believes that the market momentum is being driven primarily by continued increases in pay-TV spend which it believes will be boosted by the arrival of the Netflix subscription video-on-demand (SVOD) service in the country.

Futuresource data shows that the German pay-TV sector is continuing its impressive rate of growth into 2014, with analogue to digital conversion still a key driver of growth. Between 2010 and 2013, the pay-TV subscribers' base grew by over 50%, or 5.3 million, to reach over 15 million subscribers, with a further 10% annual growth expected in the next three years. The analyst also expects overall digital spend to see a marked increase in 2014, by almost 50% driven by new services and increased investment in the sector.

"The majority of the growth is attributable to subscription video-on-demand, which is set to at least double in 2014, helped by the recent launch of Netflix and Amazon Prime Instant Video", commented David Sidebottom, senior market analyst at Futuresource Consulting. "These major services, together with the continued development of the pay-TV sector, will drive the evolution of the video sector in Germany ... The arrival of Netflix in Germany marks the beginning of an exciting new era for the German video market, and for German consumers. However, it won't be without its challenges, given the German consumers affinity for packaged media and many being traditionally resistant to premium subscription services. Also, the strength of free-to-air television has also been an obstacle to both digital video and pay-TV services historically."

Looking into the near future, Futuresource calculated that SVOD spend will surpass total transactional digital video spend by the end of 2015, with hardware and service partnerships also helping improve consumer awareness and familiarity. Key to service uptake will be the ability to harness the installed base of connected TVs, which is set to reach 46% of households by the end of 2014.

 At almost €1.5 billion, said Futuresource, packaged video is set to account for over 21% of total video spend in 2014, the highest level of any country in the world and After bucking the global trend and showing growth in 2013, the packaged video market is set to decline by 11% in total in 2014.