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Digital to Overtake Physical Home Entertainment in U.K.

For the first time ever consumers in the U.K. will spend more on streaming subscriptions and digital downloads than on buying and renting DVDs and Blu-ray Discs, according to research from London’s Strategy Analytics.

For 2016, the research firm estimates that consumers there will spend £1.31 billion ($1.89 billion on streaming and downloading, up 23.7% from 2015. Conversely, they’ll spend £956 million ($1.38 billion) on discs, a year over year decline of 16.3%.

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

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Spending on streaming services including Netflix and Amazon will jump 36% to £742 million ($1.1 billion) or £1 in every £3 spent on home entertainment. Currently there are 4.6 million Netflix households in Britain and 2.5 million who have Amazon Prime. By 2021, Strategy Analytics expects streaming subscriptions to account for more than half of home entertainment spending in the U.K. VOD spending is expected to rise 8% to £338 million ($487 million) in 2016.

In the U.S., spending on digital for the first quarter of the year hit $2.48 billion, vs. $2.07 billion on physical, according to DEG: The Digital Entertainment Group.

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