Average U.S. Consumer Spends $1,000 a Year on Video Entertainment

by | 3 minute read

U.S. con­sumers may be cut­ting the cord with their cable TV com­pa­nies, but they are still eager to watch online video enter­tain­ment. A new report from Future­Source Con­sult­ing val­ues the U.S. video mar­ket at $123 bil­lion for 2015.

The over­all US video enter­tain­ment mar­ket (sub­scrip­tion Pay-TV, box office, pack­aged home video, Pay-TV VoD and paid-for online video) con­tin­ues to grow in low sin­gle dig­its, reach­ing $120 bil­lion in 2013 — a 2% increase over 2012 — and is on track to peak at $123 bil­lion in 2015, accord­ing to Future­source Con­sult­ing.

"At $120 bil­lion, this approx­i­mates to an aver­age of $1,000 being spent on video enter­tain­ment by every US house­hold," says David Side­bot­tom, Senior Mar­ket Ana­lyst, Future­source Con­sult­ing. "This is by far the high­est in the world, and sig­nif­i­cant­ly high­er than any Euro­pean coun­try."

The US video mar­ket com­mands a unique posi­tion on the world stage, dri­ven by an exten­sive choice of view­ing options and a strong cul­ture of new tech­nol­o­gy adop­tion: dig­i­tal video spend in the US is larg­er than the rest of the world com­bined, yet pack­aged sell-through is still only declin­ing in sin­gle dig­its, ensur­ing rel­a­tive mar­ket sta­bil­i­ty.

"Div­ing into the detail, Pay-TV is dom­i­nat­ing the over­all video mar­ket at more than $90 bil­lion, around 75% of total con­sumer spend," says Side­bot­tom, "and although cord-cutting is gen­er­al­ly over-hyped, the minor­i­ty of snip­pers and shavers is hav­ing an impact on the bot­tom line.

"Look­ing to the dig­i­tal video mar­ket — total Pay-TV VoD and total paid-for online video com­bined — we're see­ing sol­id growth, despite the rel­a­tive matu­ri­ty when com­pared to oth­er coun­tries. Last year it was up 25%, main­ly due to elec­tron­ic sell-through (EST/download-to-own) and con­tin­ued SVoD growth, led by Net­flix. In par­tic­u­lar, EST has expe­ri­enced a resur­gence with con­sumer spend grow­ing 43% in 2013, reach­ing $1.5 bil­lion. We're going to see this phe­nom­e­non roll on through 2014, with Future­source research sug­gest­ing anoth­er 33% growth spurt, which will nudge the mar­ket close to $2 bil­lion."

The pack­aged video mar­ket, although in decline, will still exceed $10 bil­lion in retail val­ue at the end of 2014 accord­ing to Future­source fig­ures, tak­ing sec­ond posi­tion behind sub­scrip­tion Pay-TV. How­ev­er, by 2015 dig­i­tal video and box office will both exceed pack­aged video spend for the first time and will extend the lead out to 2018 and beyond.

"As in many oth­er mar­kets, pack­aged video is becom­ing increas­ing­ly dri­ven by new release prod­uct, with cat­a­logue suf­fer­ing due to mar­ket sat­u­ra­tion, declin­ing retail space and the growth in video con­sump­tion on SVoD ser­vices," says Side­bot­tom.

Box office was rel­a­tive­ly steady in 2013 and is expect­ed to show a minor decline in 2014. How­ev­er, the sol­id release line-up for 2015 will see box office reach a record $10 bil­lion, as pre­vi­ous­ly men­tioned, with a steady and slight decline antic­i­pat­ed beyond this.

"An unquench­able con­sumer thirst for enter­tain­ment, the exten­sive choice of deliv­ery plat­forms and ser­vices now avail­able, and eco­nom­ic recov­ery are cre­at­ing the ulti­mate stim­u­lus for the US video enter­tain­ment mar­ket," says Side­bot­tom.

About 14.6% of U.S. adults now reg­u­lar­ly stream video enter­tain­ment from ser­vices like Net­flix or Hulu Plus. In the next year, about 26% of stream­ing video con­sumers expect to pay for account­ing or tax ser­vices and 19% plan to play col­lege tuition fees for them­selves or a fam­i­ly mem­ber. These con­sumers, 31% of whom are between the ages of 25 and 34, are more like­ly than aver­age to enjoy work­ing with tech­nol­o­gy and gad­gets. In addi­tion, in the past year, about 43.6% have start­ed an online search after see­ing an Inter­net ad.

Audi­enceS­CAN data is avail­able as part of a sub­scrip­tion to AdMall for Agen­cies. Media com­pa­nies can access Audi­enceS­CAN data through the Audi­ence Intel­li­gence Reports in AdMall.

Kathy Crosett
Kathy is the Vice Pres­i­dent of Research for Sales­Fu­el. She holds a Mas­ters in Busi­ness Admin­is­tra­tion from the Uni­ver­si­ty of Ver­mont and over­sees a staff of researchers, writ­ers and con­tent providers for Sales­Fu­el. Pre­vi­ous­ly, she was co-owner of sev­er­al small busi­ness­es in the health care ser­vices sec­tor.