By Olivia Lowden and James Duvall
Futuresource Consulting

Despite the obvious challenges of recent years – the snowstorm of prolonged lockdowns, social restrictions, and the cautious attitudes that followed – 2022 represented the beginning of a post-pandemic outlook for much of the video industry.

One of the cornerstones of the video entertainment industry’s recovery has been the return of the box office. Within Western Europe, France and Spain have enjoyed cinema’s triumphant return, yet the picture has been staler for Italy.

Futuresource’s vast geographic coverage of the video sector grants a holistic overview of the industry. Having recently published two reports on the current situation in Spain and Italy, the outlook remains positive. While the micro-picture between nations varies, with global concerns surrounding inflation and subsequent spending patterns fluctuating between regions, the overall picture is one of recovery.

A Brief Snapshot of Video Highlights from Our Recent Reports

• The Italian video entertainment market (including Pay-TV, box office, physical home video, total Pay-TV VoD and total paid-for online video) is on the road to recovery and is set to grow by 6% to €3.7 billion by the close of 2022.
• Whilst 2021 and 2022 have seen global cinema revenues grow (forecasts this year show a healthy 40% growth on the previous year), revenues are still falling short of pre-pandemic levels. Italy is experiencing a particularly slow recovery and is not forecast to reach pre-pandemic levels until beyond 2026.
• The overall video entertainment sector in Spain continues to perform positively, despite consumers showing caution around their disposable income.
• Although SVoD subscriptions have seen a slowdown in 2022, it accounts for 35% of consumer spend and will continue to be a major aspect of growth in the overall video entertainment landscape.
• Box Office on the Up but Italian Recovery is Slower Than Expected
• The return of cinema is spurring healthy growth in the global video market. Spain in particular enjoyed a year of a strong recovery, aided by the easing of all restrictions in the year’s first half. The 2022 box office is set to reach almost double the 2021 level at €480m, with a bumper slate of new releases from major franchises.

Despite this overall picture of optimism, Italy’s recovery has been slower than hoped. It was the only major European territory to see box office spending slump in 2021; while 2022 has shown evidence of recovery, the movement has been lower than estimated.

Futuresource do not expect the market to reach pre-pandemic levels of activity over the forecast period, even with a string of new releases. Top Gun: Maverick shone through the drought as the best-performing title of 2022 in Italy, grossing almost €13.4m and making over €3m during its opening weekend.

Cost of Living Crisis Creates Cautious Atmosphere

As 2022 has progressed, headlines have been dominated by the cost of living crisis and inflation. This is understandably driving an atmosphere of caution among consumers, with European markets bearing a strong financial burden. The knock-on impact of this has been noticeable among SVoD subscriptions; in Futuresource’s Living with Digital survey, consumers who cancelled SVoD services cited cost as the primary reason for doing so.

While SVoD subscriptions have suffered, a reticence to spend has been felt most significantly across cinema than in any other video category. In Italy, 36% more people said they will spend less money on cinema instead of spending more. In Spain, this figure was as high as 38%.

But this enhanced caution is just one side of the coin. Box office sales are still largely on the up, and research shows that there remains some headroom for increased SVoD service uptake.

Market Resilience Leaves Plenty of Room for Optimism

The market has experienced its fair share of setbacks, but likewise demonstrated considerable resilience. The pandemic brought major shifts to the structure of the video landscape, some of which haven’t fully reversed. Despite major global economic challenges, the industry is adept at adapting services to maintain consumer interest. The launch of Paramount+ in Q4 2022 will generate further activity. Plus, both Netflix and Disney+ are pursuing the route of ad-tiers, with Netflix introducing this across multiple markets in November, and Disney+ set to introduce this in the US on the 8th of December.

Overall consumer spending is seeing an uptick, so there’s much to be positive about. By 2025, the global video entertainment market (including box office, PayTV, SVoD, and Transactional) is projected to generate $359bn, growing at a 5% CAGR. By the end of the forecast period, video will contribute 57% of overall entertainment spending (as part of the wider entertainment landscape, including music and games).

Futuresource will soon be releasing more updates on the video entertainment sector within our two upcoming reports. Gain a country-specific insight into the patterns and spending habits dominating the video sector, with precise updates on Online Video, box office, Pay-TV, and physical home video.

To enquire about any of the reports referenced, or our upcoming Video Insights releases, please contact leon.morris@futuresource-hq.com.

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