Gloomy outlook for film and video distributors
Film, TV and home entertainment distribution revenues in Australia are projected to fall by 3.1% to $2 billion in 2013-2014 due to the continuing decline in DVD and Blu-ray sales.
That’s according to IBISWorld’s Motion Picture and Video Distribution in Australia report. The outlook for the sector is not bright: The research firm expects the decline in industry revenues to persist for the next five years, falling at an annual rate of 2.4% to $1.7 billion in 2018-2019.
The report tracks 298 businesses that sell and lease feature films to cinemas, video stores, free-to-air and pay-TV broadcasters. It estimates the industry-wide profit will be $174.6 million in 2013-14, equating to 8.9% of industry revenues, a stable level over the past five years.
“Despite higher profit margins from increases in digital downloads, profit is expected to decrease to 8.5% of industry revenue in 2018-19, as industry wages rise and as DVD and Blu-ray disc margins continue to fall,” it says.
IBISWorld estimates 50.9% of the film and video distributors are in NSW, representing 46.1% of industry revenues, with Victoria accounting for 26.8% and 27.1% respectively.
It rates Village Roadshow as the industry leader with 18.3% of the market, followed by Warner Bros. Entertainment at 14.6% , Sony Pictures Home Entertainment at 6.8% and News Australia (20th Century Fox Home Entertainment) at 6.4%.
Video-on-Demand services may spur demand for film product from pay-TV operators but this will be at the direct expense of sales of DVD product to video rental retailers, it predicts.
“Other new demand areas include legal movie download websites, tablet downloads and gaming consoles,” it notes . “However, these innovations still require distributors to access a library of quality digital and 3D film products.
“Overall, the industry will remain dominated by the major global film distributors over the next five years. The number of independent distributors is expected to continue declining, mainly through mergers or acquisitions.”