James R | On 09, Jan 2021

2020 was a record year for digital video, according to figures from Official Charts Company, Futuresource Consulting and Kantar, with viewers in varying forms of lockdowns and tiered restrictions not only turning to subscription streaming services such as Netflix but also to transactional purchases and rentals.

Typically, the former has been the dominant player in the online living room era, and subscription VOD (SVOD) did indeed grow 42 per cent year-on-year, accounting for 74 per cent of the total market value in the digital sector – thanks to the arrival of Disney+ as well as the expansion of existing platforms. Data from Kantar reveals that almost one in four (23 per cent) British households signed up to a subscription service during the first quarter of 2020.

Indeed, a report from Ofcom last summer found that a surge in screen time during lockdown meant people in the UK were spending 40 per cent of their day watching TV and online video services – and twice as much time watching subscription services.

But the transactional VOD (TVOD) market has also grown, indicating that the two models can not only co-exist but expand in tandem. That’s partly fuelled by the wider tests and trials of the premium VOD (PVOD) rental format in place of more traditional theatrical windows, with titles such as Trolls World Tour, Scoob! and Mulan all getting the PVOD treatment in some form or another.

In the US, Universal has since inked a deal with AMC cinemas to introduce a PVOD window for its titles, which paves the way for wider formal adoption of the distribution strategy. In the UK, according to Kantar, 1.1 million viewers have rented a PVOD title since March 2020.

Total EST (electronic sell-through, or digital purchase) sales across both film and TV content delivered 14.5 per cent growth year-on-year in 2020, after a record period of growth during the March 2020 lockdown. Film EST ended the year with 27 per cent growth in volume and 16 per cent in value. During the first 12-week lockdown period in the UK, the share of spend for digital film was 45 per cent of the total £138.6 million spend (covering both EST and physical discs), up from a 26 per cent share across the same period in 2019. This huge growth was retained after lockdown, with digital film EST ending 2020 with 36 per cent of the market spend, up from 26 per cent in 2019.

So where does premium VOD fit into this? Kantar’s 1.1 million PVOD figure above classifies any “premium” transaction as a rental costing above £10. These accounted for 6 per cent of all digital rentals and 20 per cent of total rental spend – a small proportion, but one that has provided a base for the entertainment sector to build upon.

Indeed, the biggest selling title of the year was Joker, with combined disc and digital sales of more than 1.4 million units. Frozen 2 was in second, followed by Jumanji: The Next Level, 1917 and Star Wars: The Rise of Skywalker. None of these were premium VOD releases.

The concept of digital rentals, however, is now more established. In the first March lockdown, there was initially an average of 600,000 total rentals per week, rising to more than 1 million rentals a week after lockdown was implemented. More than 30.8 million rental transactions were made in the year to October 2020, a significant chunk of the total 75 million pieces of content that have either been purchased or rented across disc, film EST and VOD.

Spend on TVOD overall, supported by shoppers new to the category, saw almost 24 per cent growth, while the total number of customers buying and renting across the video sector grew by 14 per cent between March and November 2020 to 12.9 million.

Discs, it should be noted, aren’t out for the count, with UK consumers increasingly opting for premium formats when purchasing physical titles: Blu-ray sales now accounts for 30 per cent of the disc market value, up from just under 27 per cent on 2019. The average selling price across the Blu-ray format has risen 7.1 per cent year-on-year to £15.94 and fans have continued to show strong engagement with 4K Ultra High Definition – sales were up 20 per cent year-on-year jumping to 23 per cent share of total Blu-ray sales.

Liz Bales, Chief Executive, BASE said: “With the pandemic affecting all corners of life across 2020, evolution in the video category has undoubtedly advanced. Digital transactional video has arguably been a beneficiary of conditions that forced people to stay home, as more than 2 million new customers joined millions more already engaging with EST and VOD content, uncovering a depth and breadth of diverse catalogue and new release content available without subscription. This shift to digital doesn’t diminish the resilience of physical formats, though, as evidenced by the performance of TV and catalogue content on disc, and by the strength of premium formats like Blu-ray and 4K UHD both underlining that many viewers are still driven by collection and the access to the best possible home viewing experience that disc provides. 2021 is clearly set to be a year of unknowns as a post-pandemic normality develops, but it is clear that the transactional market, in its established and newer distribution models, continues to be a significant part of the picture across an industry well versed in dealing with change.”

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