The popularity of video services like Netflix and Amazon will help the movie business generate $8 billion in extra revenue over the next five years in the United States, according to a new study by PricewaterhouseCoopers.
That conclusion flies in the face of recent performance and popular perception. Revenue from the movie business has been flat over the past five years, and there are those, like Jeffrey Katzenberg, who think it is no longer a “growth business.”
Yet the report projects total revenue will rise from $31.1 billion to $39.1 billion, and the bulk of that growth will come from the home video sector.
That would be great news for the movie business, which has been hurting for years due to the collapse of the DVD market. Physical sales will continue to decline, but the report projects streaming will replace that revenue – and then some.
“The growth in electronic home video revenue is starting to compensate for the decline in physical home video revenue,” the report found.
Revenue from the electronic side, which includes both subscription services and those that offer movie rentals, grew 73.8 percent between 2009 and 2013.
“Demand for digital services is what is driving the growth,” Cindy McKenzie, Managing Director of PwC’s Entertainment, Media & Communications practice, told TheWrap.
Movie studios have trumpeted the success of electronic sell-through, arguing people still want to own movies. While there has been an increase in digital sales, McKenzie said it would not be a primary driver.
The initial report covers the U.S. market, and things look even better overseas. PwC projects the global market will grow almost $22 million over the next five years.
Unlike the U.S. market, the overall global market has been growing because the decline of DVDs is not as severe, the audience for digital services is larger and the theatrical market is not as mature.
“The boom in film production and cinemagoing in China (now the largest market for film outside the US), Russia, India and Brazil will ensure this spike continues,” the report found.
See chart below: