This year, people in the United Kingdom will spend more on video streaming subscriptions and movie and television downloads than on buying and renting DVDs. However, they will continue to spend far more on pay television services, which are well placed to become prime providers of online video.

Strategy Analytics forecasts that consumer spending on streaming and downloading video in the United Kingdom will exceed £1.3 billion in 2016, compared to £0.96 billion on DVD and Blu-ray discs.

Money spent buying video on disc will still account for £905 million or 40% of the market in 2016, but that is down from 75% in 2011.

Streaming subscription services, like Netflix and Amazon Prime Video are the fastest-growing format, rising 36% to £742 million, or £1 in every £3 spent on home video.

Download to rent is forecast to account for £338 million, up by 8%, while download to buy will be worth £234 million, up 16%.

The research firm says that video streaming subscriptions will be the dominant format from 2017 and will account for over half of consumer home video spend by the end of 2021.

United Kingdom Home Video Market 2011-2021. Source: Strategy Analytics.

Five years ago, DVDs represented 86% of consumer spend on home video. In five years it will be less than 14%, with DVD and Blu-ray rental virtually extinct,” said Michael Goodman of Strategy Analytics.

“As online provides increasing ways to access films and box-sets, physical simply can’t compete. Although many people will always prefer a physical disc, retailers will have to decide whether it’s even viable to offer that format in five years’ time. Many won’t and with less high street players around, it will be online, ironically, that keeps DVDs on life support via e-commerce.”

Overall, the £2.27 billion to be spent on home video in the United Kingdom in 2016 is a 3% rise on 2015. It is the equivalent of £6.63 per household a month. However, video advertising around streamed and downloaded content will rise 23% to £593 million. Thus, overall revenues for the home video market will grow 6.6% to £2.86 billion.

This confirms the informitv view that subscription video services are mainly a substitute for disc rental and purchasing, rather than pay television.

It is also worth noting that the subscription revenues for Sky alone in the just United Kingdom and Ireland were £6.7 billion in 2015. That is more than the total revenues for Netflix.