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Video streaming services could make more money than the US box office by 2017

Video streaming services could make more money than the US box office by 2017


Report says video on-demand will make up 43 percent of US film industry

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Online streaming video services such as Netflix and Hulu will make more money per year than the US movie box office by 2017, according to a new report released by PricewaterhouseCoopers. The report projects that streaming services will be the biggest contributor to the American filmed entertainment industry in four years, as the revenue generated by TV and subscription video on-demand providers reaches almost $14 billion, $1.6 billion more than the amount earned from the traditional cinema box office.

PwC's analysts say the money earned from on-demand video will rise by $10 billion in five years. Online and TV-based streaming services combined to pull in a revenue of $7.34 billion in 2013, a figure that PwC says will rise to $11.47 billion in 2016, before reaching $17.03 billion in 2018. That rise will be driven primarily by subscription video services such as Netflix and Hulu, PwC says, rather than by through-TV subscriptions.

Streaming services will increase their revenue by $10 billion in five years

That stratospheric rise will come as the money made by physical home videos falls rapidly. The revenue generated by physical media — DVD and Blu-Ray rentals and sales — dropped by $3 billion between 2009 and 2013. PwC says it will drop by a further $4 billion between 2013 and 2018, from $12.22 billion to $8.72 billion.

Despite the huge success of streaming video services, the report doesn't suggest that the meteoric rise of Netflix and its peers will contribute to a drop in box office takings. Movie ticket sales have been slowly and steadily increasing the amount of revenue earned for the US film industry every year, and that trend will continue, albeit at a slower rate than the revenue increase of streaming services. The US movie box office pulled in $11.56 billion in 2013, a number that PwC says will rise to $12.75 billion in 2016, before reaching $13.41 billion in 2018.

Box office takings will also increase

The main area streaming services will have an impact on the traditional box office, the report says, is in release dates. At the moment, most movies are given months in theaters before they slowly make their way to streaming services. PwC says the strength of companies such as Netflix is expected to put pressure on the industry to make this transition faster, offering filmed entertainment to consumers earlier.

The report says streaming video is in the process of replacing physical media as the preferred method of watching movies at home, but PwC says that by 2018, the US film industry will still be in robust health. Adjusting for inflation, the total revenue generated by US filmed entertainment will rise to $39.16 billion in 2018, from $31.12 billion. The report also notes that, although streaming companies are growing rapidly in power and income, they're yet to seriously alter the US movie market. "For all the turbulence caused by the conversion to digital, and the disruption caused by window compressions, new revenue streams, reduced film slates and competition from global producers, the core economic model of the American film industry remains — to date — largely unchanged."