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Netflix damaging physical market

26 February 2016
Netflix damaging physical market

Netflix is causing a significant decline in the spending on DVDs and Blu-rays, according to an IHS report.

The report, Did Netflix Kill the Physical Video Market, stated that there is a ‘clear correlation’ between the launch of Netflix in 2007 and the fall of physical sales.

It found that, prior to the launch of the streaming service, disc purchases were falling by an average of 1.2 per cent per year.

Since 2010, however, it reports that spending has fallen by an average of 10.3 per cent per year.

“The data shows that Netflix’s entry into a market has a noticeable effect on consumer behaviour, even in countries where they already had access to other streaming video services,” said IHS Technology senior researcher Helen Davis Jayalath.

“Movies and TV shows are not only the biggest draw for Netflix subscribers, they are also the backbone of the home entertainment industry, generating 80 per cent to 90 per cent of the business in most countries.”

In the UK, IHS found that physical movie sales have more than halved since the first SVoD services launched in 2008, with the steepest annual decline, a 14.5 per cent drop, coming in 2012 – the year Netflix launched.

UK rentals have been hit particularly hard, with a decline of 75 per cent since 2012.

In 2015, SVoD services contributed 26 per cent of the £1.8 billion that British consumers spent buying and renting movies and TV content.

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