Music and video retailers face a bleak future without streaming service revenues, according to a report by GlobalData.
The music and video market (including streaming service revenues from the likes of Spotify and Netflix) is forecast to grow 46 per cent between now and 2023, but excluding streaming, it is set to decline by 21 per cent. That equates to a bleak future for smaller retailers relying on the sector, which is now dominated by global technology giants such as Amazon, Apple, Netflix and Spotify, according to GlobalData.
“Streaming subscriptions have been driving growth and innovation in the industry while removing much of the need for traditional retail products such as DVDs, CDs as well as downloadable files,” says Zoe Mills, retail analyst with GlobalData.
“The only sub-category aside from streaming services not in decline yet is the digital video market, driven by subscription services such as Amazon Prime, encouraging customers to purchase products not included in its service for a fraction of the price of a physical DVD or Blu-ray.”
Apple’s entrance into streaming with Apple Music has resulted in limited investment in its original platform: iTunes. As a result, this service has experienced sluggish traffic to its site as it actively encourages consumers to sign up to its newer alternative. Sales will continue to decline at an accelerating rate. This will result in an almost negligible digital music market by 2023, worth less than US$138 million, which is half the size of what it was last year.
Since 2014, streaming services have been leading authorities in TV and film, creating original content for their platforms. The most successful of these has been Netflix, winning awards in 2014 and last year.
Mills says that with with Netflix, Amazon Prime Video, and Hulu (a US streaming service), having all received accolades for their original content and both Netflix and Amazon Prime video developing film content, these networks have the potential to develop high quality film catalogues.
“Becoming producers in their own right is something that retailers have never attempted historically, yet streaming services have revolutionised the market, giving players more control over content and a unique point of difference.”
Despite continuing to dominate the music and video market, streaming services do still face a number of challenges. Music subscriptions have historically come under a considerable amount of scrutiny. However, these grievances are not limited to the music industry; Disney announced it would be removing its content from competing services Netflix and Amazon Prime, as it encourages more consumers to subscribe to its own fascia, Disney Life.
“In the future, we are likely to see a growing demand for a more streamlined subscription service for all entertainment needs,” says Mills.
“Amazon is in the strongest position to promote both its video and music platforms under one service as an alternative for those that currently pay for separate music and video subscriptions. While this will reduce consumer spending on subscriptions as fewer are needed, volumes are expected to soar.
“Both Netflix and Spotify could face troubles if demand for a combined service grows as neither has set in motion a move to offer both forms of entertainment. In comparison, while Apple is very much at the beginning of this process its TV series – Carpool Karaoke and Planet of the Apps – are a stepping stone to future TV and film development.”