The closure of half of the UK’s largest video rental stores and an attendant rise of pay-TV video will push DVD and Blu-ray rentals off the cliff, according to research from IHS.
Even though the market for physical video media has been on the decline for some time, the analyst’s report predicts that 2013 will bring the sharpest predicted annual decrease for the 11-year period from 2007 through 2017.
As the UK stops getting physical for video, IHS projects that the UK market for Blu-ray and DVD will plunge by 22% year-on-year by the end of 2013, when only 264 Blockbuster stores will be open in the country, down 50% compared with 2012.
In value terms, the UK market for physical video rental will likely plunge 22% to £202 million in 2013. Both DVD and Blu-ray transactions are due to decrease across the store-based sector this year. DVD rentals will likely fall by 53.2% to 15.4 million units while Blu-ray is set to drop by a precipitous 61.3% to 2.8 million. In 2012, UK rental stores were responsible for 41.3% of the video rental market based on consumer spending, and the forecast is that for 2013 the sector will generate just under a quarter of the overall market.
Yet this does not mean that money is walking away from video, says IHS. Indeed the big winner is the online sector, which will see its share of market increase massively from 58.7% in 2012 to 75.3% by the end of this year, with customers increasingly more likely to turn to a host of other video platforms, primarily pay-TV services.
“The year 2013 is set to become a watershed for the UK video rental market as a result of the wholesale closure of Blockbuster UK stores,” said Tony Gunnarsson, senior video analyst at IHS. “The massive downturn in the store-based video rental market represents a significant loss to the video market and will result in a major decline and radical transformation of the UK video market overall. From 2013 on, the UK physical video rental business increasingly will be dominated by online rent-by-mail subscription services.”