PwC Study: Electronic Home Video to Top Physical by 2016

According to new report from PricewaterhouseCoopers, box office and digital revenue is expected to steadily increase over the next five years, while rentals and sales of discs are projected to sharply decline. PwC predicts that electronic home video revenue will exceed revenue of physical home video by 2016. Not surprisingly, DVDs are facing a questionable future. PwC estimates that physical home entertainment revenue will decline from $12.2 billion in 2013 to $8.7 billion in 2018.

bluray“By 2018, electronic home video, which includes subscription video-on-demand services and cable on-demand offerings, will be the main contributor to total filmed entertainment revenue, overtaking the box office by 2017, the study finds. In five years, revenues for the sector will double from $8.5 billion in 2014 to $17 billion by 2018,” reports Variety.

“Ticket sales are projected to climb over the next five years, with domestic box office revenue climbing 15.9 percent from $10.8 billion to $12.5 billion. Meanwhile ticket prices will increase by less than a dollar from an average of $8.89 to $9.81 by 2018.”

Cindy McKenzie, managing director of PwC’s entertainment, media and communications practice, suggests that the success of online video services such as Netflix and Hulu are opening up new revenue opportunities for film companies. Purchasing is also on an upswing; electronic sales of movies topped $1 billion in revenue for the first time in 2013.

Digital distribution also enables potential cost savings. “The amount of money that you’re making per transaction may not be the same, but it is cheaper to distribute things digitally,” McKenzie said.