More consumers to watch digitally delivered video

Transition to online digital viewing from DVD and Blu-ray continues

Research from In-Stat has confirmed that the market for video services delivered via a mobile device such as the smartphone or the tablet is expanding.

According to the US-based analyst firm, mobile video consumption will exceed 693 billion minutes by 2015 and providers are experiencing noticeable growth in usage.

Amy Cravens, market analyst at In-Stat, said: "As content restrictions are liberalised and the proliferation of smartphone and tablet devices continues to expand, so too will mobile video consumption."

However, she added, consumption varies between smartphones, tablets and notebooks or netbooks.

"Differences include content length, content genre and content acquisition. Content providers need to customise their offerings by target platform," Craven said.

In-Stat has found that nearly 66 per cent of smartphone owners so far have watched video on their devices, while nearly 86 per cent of tablet owners have done so. Only a portion has shown a tendency to opt for full-length premium video on the mobile device.

Craven said there are "significantly" more viewers of video on the smartphone than on the tablet. However, the gap would narrow in coming years. Furthermore, tablet viewers were watching more video and were also willing to pay a higher price for that video.

And despite the mobile device being used for video access, viewing was mostly occurring in a non-mobile environment, often in the home. Content owner restrictions and network capacity remained barriers to growth currently, she said.

The consumer spend on digital entertainment across video, gaming and music globally will tip $52bn by 2014, according to Futuresource Consulting.

The figures include paid-for online and pay-TV video-on-demand services, and represent a rise from a 24 per cent share of the total global spend on packaged and digital media to 46 per cent.

Mai Hoang, senior analyst at Futuresource, said packaged media sales are declining slowly but surely.

"It certainly isn't falling off a cliff," Hoang said in a statement. "The decline in packaged media across video, gaming and music has attracted a lot of debate on the future of entertainment content, but packaged media still plays a huge part in total sales. Combined with the availability of new platforms, digital and packaged media together will still achieve $112bn in revenue in 2014."

Most packaged media revenue was from sales, but rentals also played a role and would go on doing so, Hoang indicated.

"2014 will see sell-through account for 70 per cent of total physical video spend, of which Blu-ray contributes over 50 per cent - compared to just 13 per cent in 2010," Hoang said.

DVD and Blu-ray rental popularity varies greatly between territories, however. In Japan, rental accounts for over half of total spend, while in the European markets, rental barely makes up 10 per cent of the market, according to Futuresource.

Blu-ray sales are not expected to grow fast enough to compensate for the shrinking DVD market, Hoang said. Any growth in the home entertainment industry will need to come from digital content distribution - which is under threat from the widespread availability of free content coupled with the common practice of illegal downloading.

"In Western Europe, paid-for online video accounted for just two per cent of total video spend; in the US it was five per cent. But the market is gaining ground and expected to increase to 12 per cent and 16 per cent respectively by 2014," Hoang said.

Apple, Microsoft and Sony are the main contenders in the paid-for online video market in Western Europe, although the market remains hugely fragmented, with a plethora of services based on wildly varying business propositions.

Many services have struggled, according to Hoang, with some already exiting the market. Bridges must be built between physical and digital content, with initiatives already being tried, including bundling and offering exclusive downloadable content.

The Futuresource figures were announced at the analyst's Futuresource Entertainment Summit this year in London.