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YEAR 2018 BOOK USE OF AHEDA YEARBOOK

This publication is provided by AHEDA for general guidance only and does not constitute the provision of tax, legal, investment or product advice.

The information is provided “as is” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and, to the extent permitted by law, without warranty of any kind, express or implied.

No part of this publication may be quoted, cited, excerpted, reproduced, stored in a retrieval system or database, distributed or transmitted in any form or by any means without the prior written permission of AHEDA.

Requests should be submitted in writing to Simon Bush at simon.bush@ aheda.com.au outlining which excerpts you wish to use and the context in which you wish to use it. CONTENTS

Introduction and Market Overview 5

Chapter

1 Australian Digital Video Market In 2018 17

2 Australian Physical Retail Market In 2018 47

3 Consumer Behaviour 71

4 Devices and Emerging Viewing Patterns 93

5 Copyright Enforcement And Protection 105

6 Creative Content Australia Report 111

7 Australian Theatrical Film Market In 2018 117

8 AHEDA Members’ Directory 123

9 Appendix: Digital Services 127

Appendix: DVD and Blu-Ray Sales Charts 133

INTRODUCTION AND MARKET OVERVIEW

INTRODUCTION

2018 was in part defined by the sheer diversity of titles from the franchise driven blockbusters to the new cross generational hits like The Greatest Showman and Mamma Mia! Here we go again with Bohemian Rhapsody and A Star is Born now hitting the home entertainment window. This amazing new content being created across film and TV generated record home entertainment sales in Australia of $2.2 billion covering both digital and physical sales proving that Australians love watching quality content now more than ever and, are happy to pay for it.

Australians spending on digital video increased 46% to $1.7 billion in 2018 (SVoD, EST and VoD combined). When you include physical discs, the total paid film and TV market in Australia is worth over $2.2 billion and growing.

Some of the success is driven by the continued adoption of subscription services in Australia which had a growth rate in 2018 of 46%, but it is also driven by the 11.6% increase in transactional digital sales we call electronic sell through (EST) and Video on Demand (VoD) across both local and global platforms. This is an area of focus for the Association, as we have been active in driving consumer awareness through local marketing and platform led sales initiatives such as Movie Frenzy.

The physical disc category continued to consolidate in 2018 as consumers switch to other forms of paid content but remained resilient in 2018 and is still a $500m + market in Australia. Taking like for like sales from retailers still in the category over the year, sales declined 13.7%. Movies, whether they be catalogue ($160m) or new release ($132m), had smaller declines of 11.5%. TV series which still contributes the largest disc category at $163m by contrast declined 26%; with consumers switching to Subscription or Free VoD platforms but we are seeing TV series that remain current on TV still holding up well in the market.

Given the way Australians consume content and media is changing, so too must AHEDA change to ensure relevancy.

AHEDA conducts consumer research providing critical insights which help drive the way our member companies plan and engage with our partners the retailers as well as the consumer.

Our Association needs to continue to adapt and in part, industry consolidation globally and locally through the Disney - Twentieth Century Fox merger, reflects this need to remain relevant. What is certain, however, is that quality stories that cut through and across generations continue to engage the consumer and they are willing to pay more for this content.

For example, heavy users of SVoD services are more likely to purchase or rent both digitally and physically. New UK research shows that 97% of all digital transactions are made by consumers with access to SVoD. And while subscription to just one SVoD service tends to reduce transactional consumption, consumers who take more than one (the majority in the UK) have a far higher propensity to transact.

AHEDA 2018 YEARBOOK 5 INTRODUCTION AND MARKET OVERVIEW

AHEDA COMMITTEES

Our active and engaged AHEDA Committee structure is providing leadership for our sector and we are excited about what the future holds. AHEDA will not sit still, it will engage with our partners, strive for consumer insights and engagement initiatives to ensure that the market prospers and provides an ongoing and rightful primacy in consumers’ media and content choices.

We are now over a year into our new AHEDA Committee Structure and I am pleased to report that it has delivered for us. We restructured and formed four active committees covering:

1. Category and Growth and Profile Committee looking at marketing, PR and sector wide initiatives to drive growth 2. Insights Committee to gain research and data on consumer insights and behaviour 3. Operations Committee, to drive supply chain improvements and cost out of our business 4. Corporate and Social Responsibility (CSR) Committee to support Starlight and other activities.

We are as a result now more aligned and outcomes focused to drive value, insights and customer engagement and value across the sector, both physically and digitally.

The Committees have driven some great initiatives in 2018 which will be discussed further below.

GLOBAL PERSPECTIVE

The Motion Picture Association’s 2019 THEME report provides a summary of the global market for both theatrical and home entertainment which they valued at US$96.8 billion. This represents a nine percent increase over 2017, and up 25% from five years ago.

The total global box office topped US$41 billion (US$0.9 billion in Australia) and in US/Canada box office reached a new record of US$11.9 billion. Total cinema screens worldwide increased seven per cent, reaching nearly 190,000. The report makes the important point that the theatrical business as the first window for a film’s release - despite this ever-complex world of media - is vital to overall entertainment industry success and that includes home entertainment.

In the home entertainment segment, global consumer spending grew 16% to US$55.7 billion, while US spending grew 12%. More than 80% of US adults watch movies and TV shows via traditional services, while more than 70% watch via online subscription services (there are now 613.3 million subscriptions globally up 27% over 2017). Thanks to innovations and ever-expanding opportunities for creators, more stories of all kinds are available in our homes every day.

As the report states, this is a marketplace that offers new possibilities to creators and audiences everywhere. And it delivers the economic and cultural benefits of film and TV that enrich our lives in so many ways.

6 AHEDA 2018 YEARBOOK INTRODUCTION AND MARKET OVERVIEW

GfK Retail Tracking: Physical Retail Market Size

$1.60 Total Value 100 $1.35 $1.39 $1.40 Total Units $1.26 $1.24 $1.29 $1.15 80 $1.20 $1.06 $1.09 Millions Billions $0.98 $0.94 $0.95 $0.90 $1.00 60 $0.71 $0.74 $0.80 $0.63 $0.60 $0.50 $0.52 40 $0.40 $0.27 $0.22 20 $0.20 $0.00 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2018 PHYSICAL DISC MARKET

GfK data shows a decline of 17% in volume in 2018 in the disc market to a value of $520m with nearly 30 million discs sold. However, when you factor Kmart’s exit and like for like retailers excluding Kmart we are seeing a decline of 13.7%.

In isolation this is not an result to get excited about, however, there are some really solid areas of performance such as new release and catalogue within the data worth highlighting.

Australians spent $132 million on new release films on disc in 2018, a decline of 11.5% over 2017.

We are seeing positive signs in this important category in digital and physical disc sales. As mentioned earlier, the ever popular and reliable franchises continued regular release slate in 2018 coupled with musical family hits like number one in sales The Greatest Showman, Mamma Mia! Here we go again and early 2019 home entertainment release Bohemian Rhapsody and A Star is Born shows that these titles perform across a wide section of the population.

Another positive sign from 2018 is that there were nine films that exceeded $30 million at the local box office compared to only five in 2017. In home entertainment there were seven films that exceeded 200,000 in disc sales versus six in 2017.

If you consider the theatrical slate for 2019, especially the second half with Avengers, Frozen 2 and The Lion King the follow through for home entertainment looks especially bright.

AHEDA 2018 YEARBOOK 7 INTRODUCTION AND MARKET OVERVIEW

2018 Top Selling DVD and Blu-Ray Titles by Volume

RANK TITLE DISTRIBUTOR 1 THE GREATEST SHOWMAN 20TH CENTURY FOX 2 MARVEL THE AVENGERS INFINITY WAR WALT DISNEY STUDIOS 3 STAR WARS EPISODE V111 THE LAST JEDI WALT DISNEY STUDIOS 4 THOR RAGNAROK WALT DISNEY STUDIOS 5 DEADPOOL 2 20TH CENTURY FOX 6 JUMANJI (2017) WELCOME TO THE JUNGLE SONY PICTURES 7 BLACK PANTHER (2018) WALT DISNEY STUDIOS 8 JURASSIC WORLD 2 FALLEN KINGDOM UNIVERSAL 9 PETER RABBIT (2018) SONY PICTURES 10 JUSTICE LEAGUE (2017) ROADSHOW

Clearly looking from the top ten sellers in 2018, there is an ongoing (and sizeable) appetite for consumption of comic and franchise content (Avengers, Star Wars, Deadpool, Black Panther).

There has been tremendous success as well from reboot or remakes of some classics such as Jumanji, Peter Rabbit, Mamma Mia, Jurassic Park and Predator with more coming from Disney this year like the wonderful classic family film The Lion King.

New Release discs have also maintained their price in recent years showing consumers understand the value of a movie and are willing to pay $20 for a disc. We have also seen in recent years that price erosion is non-existent as you can see from the graph below.

New Release DVD’s had an average price of $20.30 in 2018, matching the price from 2017. Blu-ray prices actually increased, impacted by the larger share of 4K titles which come with a higher average selling price.

GfK Retail Tracking: New Release Avg Format Price by Year

$35 $29.6 $28.9 $28.5 $29.2 $30 $27.6 $27.6

$25 Blu-ray $21.8 $20.8 $19.9 $20.0 $20.3 $20.3 DVD $20

$15 2013 2014 2015 2016 2017 2018

8 AHEDA 2018 YEARBOOK INTRODUCTION AND MARKET OVERVIEW

TV series decline continues to impact on physical performance and some of this can be explained in the data based on individual titles like game of thrones as well as continued impact of SVoD but ongoing TV franchises continue to sell well in our market.

However, the big takeaway is the continued support Australians have for disc purchasing and collecting, especially the big new releases, the franchises, the cross-generation films that we saw in 2018 like the highest selling title the Greatest Showman and the resilience of older titles on disc.

Ranked by value, the ever-popular Game of Thrones comes into the top 10, the only title that was released before 2018 to make it into the top 10 sellers for the year. Per capita, Australian disc purchase rates remain the highest of any country.

Seasonality continues to be important for the disc business with the Black Friday week the best performing week in Q4 2018.

Blu-ray is now performing better than DVD, down just 7% taking a larger share of the market than ever before and 4K UHD is an area of growth – up over 80% in volume and value noting it is from a low base.

After declining in share for many years, Catalogue Movies have jumped in the last 2 years and is now the equal largest sector, with TV Series. Catalogue Movies was the best performing sector in 2018, declining by the lowest rate of any of the market sectors.

TV Series recorded the biggest decline, down 27% in value and dropping to its lowest share since 2011.

Data shows that TV series on disc has been a major area of weakness for the past couple of years and no doubt the rise of the SVoD platform has played its part in this but it doesn’t tell the whole story.

So when we look at comparable retailers market performance for physical sales of a decline of 13.7% in value for 2018, TV series is a large component of value as it declined 26%.

However, Australians still are buying series and box sets. What we didn’t have was a new blockbuster Game of Thrones or a Breaking Bad in the same period such as we did going back a few years.

AHEDA 2018 YEARBOOK 9 INTRODUCTION AND MARKET OVERVIEW

2018 Top Selling TV Series on DVD and Blu-ray by Volume

RANK TITLE DISTRIBUTOR 1 GAME OF THRONES SEASON 7 ROADSHOW 2 OUTLANDER SEASON 3 SONY PICTURES 3 A PLACE TO CALL HOME SEASON 5 UNIVERSAL 4 THE CROWN SEASON 1 SONY PICTURES 5 BIG LITTLE LIES SEASON 1 ROADSHOW 6 VIKINGS SEASON 5, PART 1 20TH CENTURY FOX 7 THE HANDMAIDS TALE SEASON 1 20TH CENTURY FOX 8 GAME OF THRONES SEASON 6 ROADSHOW 9 WESTWORLD SEASON 1 ROADSHOW 10 BIG BANG THEORY SEASON 11 ROADSHOW

To show how popular this one title is and how it can affect a category, GoT season 7 which was released in 2017 was still ranked as number 1 in 2018 and Game of Thrones season 6 came in at number 8 in TV titles last year. Needless to say, GoT out on disc later this year should do well!

Other interesting take out from the TV category is it is clear that ongoing TV franchises are holding up very well in sales.

Netflix becoming a major investor in content has had an interesting positive impact on the disc market with one of the biggest titles from 2018 was a Netflix title, The Crown at number four.

The dystopian sage, A Handmaids Tale, performed well on disc in Australia and came in at number seven despite it being on free to air TV (SBS) and the entire season being available for free on SBS’ catch up service.

This goes to the fact that Australians love current TV franchises and are keen to own and keep on disc.

Our content is still in very high demand and has the highest production values and best stories – we know Australians want to watch, own, rent and view our content on disc.

DIGITAL PERFORMANCE

The transactional digital market in Australia went from strength to strength last year and we have again seen double digit growth in this category of 11.6% to a total value now worth $291 million.

AHEDA ran its first combined whole of sector campaign in early August last year called Movie Frenzy which is discussed in more detail shortly.

Including subscription (SVoD) services along with digital transactions, the total digital growth story over the past year is at 46%, or nearly $1.7 billion.

10 AHEDA 2018 YEARBOOK INTRODUCTION AND MARKET OVERVIEW

The transactional digital video market in Australia in 2018 of $291 million is broken up into ‘electronic sell-thru’ (EST), which grew 9.9% to A$133m and digital rental, also known as Video-on-Demand (VOD), which increased 13.1% to A$157m over 2017.

IHS forecast that consumer spending on digital transactional will increase just over 20% to nearly $350 million in 2022, compared with spending in 2018.

In terms of digital transactions volumes, just over 24 million VoD and 8.5 million EST transactions were made by Australian consumers in 2018 - up 13.3% and 3.3% respectively.

Movie content transactions increased 13.1% to 28.3 million on the back of solid growth in both Movie VoD (13.3%) and Movie EST (12.3%) transactions.

Australia: Consumer Transactions, 2011 - 2018

15 Transaction (Millions) 10

0 2011 2012 2013 2014 2015 2016 2017 2018

TV VoD TV EST Movie VoD Movie EST

The data clearly shows that the transactional digital growth is largely in the Movie VoD and EST categories (13.3% and 12.3%).

It is no surprise that TV EST transactions declined 4.1% with consumers as SVoD platforms continue to invest in often high production values and exclusive TV content.

An interesting development in the digital market in 2018 is that box sets and bundles are starting to gain consumer interest and is a growing area. This is in part due to the investments in technology and maturity of the platforms themselves that can put forward innovative consumer offerings and we look forward to exploring the link between the technology capability of the platforms and link this to the Australian consumer’s propensity to buy.

AHEDA 2018 YEARBOOK 11 INTRODUCTION AND MARKET OVERVIEW

AHEDA MOVIE FRENZY CAMPAIGN AND PROMOTING THE CATEGORY

AHEDA members came together last year to work with the digital platforms to drive a unique collaboration and initiative called Movie Frenzy. The lessons learned from the first campaign in August last year were included and implemented in the second February 2019 Movie Frenzy 2.0 campaign.

We worked with our customers, the platforms, to deliver a consumer proposition that was aimed to:

• get lapsed and new customers to transact and get back into VoD purchasing and aid long-term growth; • increase movie transactions within existing subscribers and account holders; and • demonstrate the simplicity, convenience and value of the transactional digital category to a broad segment of the market.

Results from this first campaign over a weekend were really positive.

The Media campaign reached over 8 million Australians, owned media reached another 2 million whilst the PR and influencers added 1.4 million.

We had great support and feedback from our platform partners and in February this year we held a second Movie Frenzy 2.0 which our initial data and analysis shows an average title for title uplift from the global platforms of 243%.

This compares to 166% uplift from Movie Frenzy 1.0 in August 2018. We have reason to believe this number may increase and the campaign may prove more effective once we receive data from the local platforms Telstra, Foxtel and Fetch.

12 AHEDA 2018 YEARBOOK INTRODUCTION AND MARKET OVERVIEW

MOVIE FRENZY 1.0 RESULTS

Results

Week on week Up to 274% week There was also halo Anecdotal feedback Platforms with the platform unit uplift on week platform effect on EST on improved VOD higher uplift across of up to 166% on unit uplift in overall transactions across performance since content supported the participating Movie VOD some of the platforms Movie Frenzy promotion off store as Frenzy titles well as on store

(source: AHEDA collated data)

Getting more consumers into the digital ecosystem remains a priority and collectively we believe we can amplify our voice.

AHEDA will continue to push for more insight and research to lead efforts to engage the consumer and will share this with our retail partners. We are investing in better understanding the Australian consumer across the physical and digital markets.

Consumerscope research which AHEDA commissions shows that VoD consumption is up and it is clear that watching a movie is still seen as an occasion to bring friends and family together in the home.

We believe that there is more and more confusion for customers as to ways to consume media; our job or task is to maintain engagement in category and battle for share of time. This is a focus for us moving forward across both physical and digital categories.

We have learned a lot about working together between AHEDA members as distributors but also working with our platform partners and we would really like to thank them for their support for growing the sector.

Together I believe we can increase share of consumption and get new customers to transact and enjoy the fantastic content that is available.

AHEDA 2018 YEARBOOK 13 INTRODUCTION AND MARKET OVERVIEW

GOVERNMENT ENGAGEMENT Our association has again been working hard to deliver results in government engagement – whether it be getting new laws passed in parliament, stopping new laws being created that are detrimental to content and copyright owners, or contributing to major policy reviews and influencing its recommendations.

In each of these situations, AHEDA has been engaged and achieved positive outcomes. We have responded and been active in the ACCC digital platforms enquiry, the media content review, the classifications system review, and the copyright modernisation review to name but a few.

The site blocking laws passed a few years ago have proven to work. Throughout 2018 and 2019, 758 piracy domains have been blocked by Australian courts for subscribers to the major Australian ISPs. Village Roadshow, Madman and six Hollywood studios have submitted their fifth site blocking case on 21 December 2018 targeting a further 79 online locations. It is expected this case will be heard in the first half of 2019.

As the Australia New Zealand Screen Association states in this Yearbook; “our research showed the blocks caused traffic to blocked piracy domains to drop by 70% to 90%. Once we factored in new domains used by these online locations that were not yet blocked, that dropped to 53%. The key metric, however, is the 25% reduction we saw in piracy volume overall.”

It shows that working with government and getting solid and workable laws in place, government engagement can and does have a material positive impact on our businesses by getting tools in place to reduce the incidence of film and TV piracy and supporting legitimate consumption of our content either physically or digitally.

However, we must remain vigilant. We have lobbied successfully for theses site blocking laws to be updated so that proxies and mirrors can be subject to the court site blocking orders and we will seek further amendments as required to shut down any new areas of piracy and theft such as set top boxes and search engine recommendations.

We have an election likely in May this year and a change in government will bring another round of policy reviews for our sector. Labor has already flagged its desire to look into the media content sector including incentives for Australian productions, location off set incentives as well as potential new policies on quotas on new media (eg SVoD platforms) so as ever it remains an active and important part of AHEDA’s remit. STARLIGHT We are proud that AHEDA and its members have been supporting the Starlight Foundation and the fantastic work it does brightening the lives of seriously ill and hospitalised children and young people across Australia. To have been providing support in this way for 25 years in 2019 is an outstanding effort and relationship – it is estimated we have contributed $7.3 million to Starlight from the start of our partnership.

For many years we conducted the Movie Month campaign which was successfully executed through the wonderful support of our rental partners. With the demise of bricks and mortar rental stores, we are now looking for other ways we can continue to support Starlight.

At our Industry Forum in 2018 we raised through a tap and donate system over $3,200, another wonderful $165,000 through the charity golf day in Sydney and another $34,000 through AHEDA trivia nights. We look for new ways to contribute to Starlight and in 2019 it is planned to host an inaugural golf day in Melbourne.

I hope you enjoy the wealth of content and information contained in the 2018 AHEDA Yearbook.

Regards SIMON BUSH CEO, AHEDA

14 AHEDA 2018 YEARBOOK “AHEDA has proudly supported Starlight for 25 years and raised over $7.3m” + Blu-ra VD y c D o 0 m 2 b i p n o e

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R a 2 n ke e d by Volum AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Consumer spending on digital video, via digital retail, digital rental, digital subscription and pay TV Video-on-Demand (VoD) continues to grow rapidly in Australia, up 46% to nearly A$1.7 billion in 2018 compared with a year earlier.

The performance in each of the digital retail and rental transactional sectors was equally impressive. Digital retail consumer spend, also known as ‘electronic sell-thru’ (EST), grew 9.9% to A$133m in 2018 compared with the previous year. Digital rental, also known as Video-on-Demand (VOD), increased 13.1% to A$157m over the same period. Combined, the online transactional and pay TV VoD market grew 11.6% to A$291 million in 2018. This reflects IHS Markit analysis of AHEDA member data, including Goods and Services Tax (GST) and grossed up to reflect the total market. AHEDA members accounted for 87% of total consumer spending on digital video in 2018. IHS Markit forecast consumer spending on digital transactional will increase just over 20% to nearly A$350 million in 2022, compared with spending in 2018.

Consumer spend on digital subscription, commonly referred to as OTT subscription grew 56% to almost A$1.4 billion in 2018, up from A$880 million in 2017. IHS Markit forecast consumer spending on digital subscription to double over the next five years to A$2.8 billion in 2022.

Figure 1: Australia: Digital video spending, 2012 - 2022

3,500

3,000

2,500

2,000

1,500 AUD, Milions 1,000

500

0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Pay TV VoD Digital retail Digital rental Digital subscription

AHEDA 2018 YEARBOOK 17 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

MACROECONOMIC AND INFRASTRUCTURE TRENDS

MACROECONOMIC FACTORS

The Australian economy grew in real terms by just under 3.0% to US$1.4 trillion in 2018. Australia’s growth in 2018 led several other advanced economics including Japan (0.7%), Italy (0.9%), UK (1.4%), Germany (1.5%), France (1.5%), Spain (2.5%) and the US (2.9%). After recording real GDP growth of 3.0% for 2018, the Australian economy is expected to slow the growth to 2.7% in 2019 in response to slowing export growth as well as weaker household consumption activity.

Figure 2: Real GDP growth across countries (%)

3.5

3.0

2.5

2.0

1.5

1.0 GDP growth % 0.5

0.0

-0.5 2017 2018

Australia France Germany Italy Japan Spain United Kingdom United States

A general election will almost certainly be called in the first half of 2019. Major policy changes are highly unlikely within the next six months, as the Government is unlikely to shift policy direction without an electoral mandate. Nevertheless, the government will benefit politically from the economy’s performance, although slower economic expansion is likely, given slower export growth and decelerating household consumption amid elevated levels of household debt.

The unemployment rate is hovering around 5.0% and there is anecdotal evidence of skill shortages as of late 2018. However, still relatively slow wage growth, high household debt levels, and falling home prices in major cities will hold consumers back. Consumption spending will likely focus on interest rate- sensitive purchases, especially since global financial market volatility increased bank funding costs and caused the top banks in Australia to raise the rates for their variable-rate mortgage products during the past year.

18 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Household consumption is a primary area of concern for the near term as wealth effects of home ownership are weakening alongside price declines in major cities. When combined with elevated household debt levels and a gradual improvement in wage growth, we expect restraint in consumer spending, with minor emphasis on interest rate-sensitive purchases ahead of rising interest rates.

Monetary policy will remain unchanged until late 2020 owing to continued weakness in inflation from slow wage growth, retail sector competition, and lower housing rents. Government revenues have beat expectations in recent quarters, allowing room for some additional fiscal spending in the near term.

MACROECONOMIC OUTLOOK

High household indebtedness will be a persistent risk for the outlook. Household indebtedness (including unincorporated enterprises) reached 188.6% of disposable income as of September 2018, owing to slow income growth and rising house prices in major cities. Looking solely at housing debt to disposable income ratio, it saw the increase of 139.6% during the same quarter. Household finances therefore remain a looming risk for the Australian economy. Because of high indebtedness, any significant loss in income or wealth will result in a retrenchment in consumption, as households will focus on cleaning up their balance sheets and spend less on non-essentials such as entertainment.

Australia will experience a growing population over the forecast horizon. Over the next 10 years, the country’s population will average an increase of 1.2% annually, which is higher than the global annual growth of 1.0%. Australia’s output per person is among one of the highest in the world at nearly US$54,000 in 2018, up from US$53,000 a year earlier. By comparison, real GDP per capita in most other advanced economies is significantly less such as Spain (US$28,000), Italy (US$32,000), Japan (US$36,000), France (US$39,000), Germany (US$43,000) and the UK ($US46,000). The US is an exception where output per person is higher at US$59,000 in 2018, up from US$58,000 in 2017.

Figure 3: Real GDP per capita across countries, USD

70,000

60,000

50,000

40,000

30,000

GDP Per Capita USD 20,000

10,000

0 2017 2018

Australia France Germany Italy Japan Spain United Kingdom United States

AHEDA 2018 YEARBOOK 19 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

BROADBAND INFRASTRUCTURE

The ongoing roll-out of the Australian Government-owned National Broadband Network (nbn) continues to push up broadband household penetration in Australia. Over 73% of Australian homes had a broadband connection by the end of 2018, up from 69% a year earlier.

NBN Co, owner and operator of Australia’s national wholesale-only, open-access broadband network, added 1.1 million homes to the footprint over the six-month period to end December 2018. This brought the number of homes and businesses ready to connect to 8.1 million at end 2018, of which NBN Co indicate 4.7 million premises are already connected via a mixture of technologies: fibre- to-the-premises (FTTP), fibre-to-the-node (FTTN), fibre-to-the-distribution-point (FTTDP), fibre- to-the-building (FTTB), HFC (hybrid fibre coaxial), satellite and fixed wireless. This major national infrastructure project continues with less than 18 months of the rollout remaining to ensure the build meets its commitment of delivering access of at least 25 megabits per second (Mbps) downstream to all premises and at least 50 Mbps downstream to 90% of fixed line premises in 2020.

The improvement in broadband infrastructure along with the expansion of 4G and 5G networks will continue to facilitate online access for Australian households as well as make high-definition content a viable option to more homes which will ultimately stimulate the digital video market to further growth.

CONNECTED DEVICES

Total device ownership in Australia continues to increase particularly of living room devices. The number of connected devices available across all types increased 3.3% to 72.8 million in 2018. Digital Media Adapters (DMAs), such as an Apple TV or Google Chromecast, experienced the fastest rate of growth, up 24.9% to 2.2 million by the end of 2018 followed by smart TVs (17.9%) and pay TV set-top

Figure 4: Australia: Connected Device Install Base

30 Units (Millions) 20

0 2014 2015 2016 2017 2018 2019 2020 2021 2022

Smartphones Tablets Game consoles PCs Smart TVs BD players Pay-TV set-top boxes DMAs

20 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

FUTURE OF CONNECTED DEVICES

The outlook for connected devices is positive largely due to the continuous rapid uptake of smart TVs, which IHS Markit forecast will increase 67% to 11 million by the end of 2022, up from 6.3 million at the end of 2018, which account for an impressive compound annual growth (CAGR) of almost 14% between 2018 and 2002.

The largest installed base of connected devices remains with the Smartphone rising from 25 million across Australia by the end of 2018 to 28 million by 2022. This is growth of almost 12% over the size of its installed base by the end of 2018 or a CAGR of 2.8% between 2018 and 2022.

However, not all device categories are expected to grow. IHS Markit forecast the installed bases of Blu-ray Disc players, Personal Computers (PCs) and Tablets will decline. Tablets will experience the largest decline in percentage terms down 29% over the 2018 to 2022 period or a CAGR of -8.3%. As smartphones continue to grow the size of the screen and processor powers, the positioning of Tablets is coming under the fire of being squeezed between ever larger phones and smarter TVs with inbuilt applications and services.

AHEDA 2018 YEARBOOK 21 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

On average, every Australian home will own a smart TV in 2022 which will reinforce the importance of the TV set in Australian living rooms over the next five years. By comparison, each Australian home will be equipped with an average of 2.7 smartphones and 1.6 PCs. Around two-thirds of Australian homes on average will still have a tablet in 2022, half will own a connected games console and around one- third of all homes in the country will be equipped with a Digital media adapter such as an Apple TV or Google Chromecast.

22 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

CONSUMER RESEARCH – MEDIA & USAGE

New research from IHS Markit reveals Australians are increasingly turning on their smart TVs, selecting inbuilt services/applications when choosing something to watch ahead of all other connected devices. IHS Markit surveyed 2,401 people in Australia during November 2018. This device agnostic online survey was nationally representative in terms of age, gender and region. The results revealed the smart TV is the preferred choice of device when looking for something to watch for just under one-third of all respondents.

Although the smart TV may be consumers’ preferred choice, the frequency of its use ultimately determines its usefulness. Around 53% of all people surveyed said they personally use their smart TV multiple times a day. A further 28.7% use their smart TV at least once a day which means that a combined 80% of respondents use their Smart TV at least once a day. Therefore, the importance of the TV set will remain in the living room as it is consumers’ preferred choice for content and is continued to be frequently used.

AHEDA 2018 YEARBOOK 23 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

However, this is only one part of the story as IHS Markit found the TV set’s importance is also reinforced in terms of its functionality to consumers. Around one-quarter of all respondents connect at least one device to the primary TV set. This may be a games console for gaming or a pay TV set-top box for a sports craved fan or to a lesser extent and becoming more infrequent, connecting a PC to cast content on the bigger screen.

24 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Therefore, if around one-quarter of Australians connect a device to their living room TV set, does this translate to it being the most used device to access TV/Video content. Not surprisingly, the games console is primarily used for gaming whilst the service/applications built into a Smart TV are most often used to access TV/video content in the living room. This is closely followed by a Freeview/Pay TV set-top box such as a Foxtel iQ or Fetch Mighty set-top box.

The TV sets importance is reinforced in terms of usage, frequency and importance of functionality to consumers. Further details are provided by demographic analysis of ownership, device type and connections to the primary TV set by age group.

AHEDA 2018 YEARBOOK 25 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Ownership of devices in Australian living rooms is highest among those aged 18-24 years at an average of 5.75 connected and mobile devices. The average number of devices connected to the primary TV set is also highest among the younger generation. But the importance of living room devices remains important for Australians as they get older. On average those aged 55-64 years still own over four devices of which a little below one on average is connected to their primary TV set.

26 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

More 55-64 year olds have access to a Freeview/Pay TV set-top box in Australia than any other age group whilst those aged between 18-24 years are more likely to be equipped with a digital media adapter, games console, Internet connected DVD/Blu-ray player or Smart TV than their elders.

The survey also considered which devices are connected to the household’s primary TV set by age group to help determine if a specific age favours the use of a device in their living room. IHS Markit found Games Consoles are mostly connected to the TV sets of Australians aged 25-34 years, suggesting a large gaming community within this age group. Conversely, Australians aged 55-64 years are not as frequent gamers and are also less likely to have any device connected to their primary TV set, thereby relying on the TV set to watch content in their living room.

Across all demographics, Australians will continue to rely on both the in-built applications and added functionality of smart TVs, as well as connect consoles, pay TV boxes and Internet connected streaming sticks and boxes to access the content they want to watch. And despite a lack of portability, the smart TV adoption rates will continue to show impressive growth in the future remaining an Australians device of choice when looking for something to watch.

AHEDA 2018 YEARBOOK 27 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

AUSTRALIAN DIGITAL VIDEO MARKET

AUSTRALIAN DIGITAL TRANSACTIONAL VIDEO MARKET

Australian digital transactional video spending increased 11.6% in 2018 to A$291 million (consumer spending includes a 10% Goods and Services Tax) largely due to consumers increasingly embracing the ‘anytime, anywhere’ convenience of watching digital content and a strong release slate in 2018 including big blockbuster titles Avengers: Infinity Wars, Solo: A Star Wars Storyand The Greatest Showman.

IHS Markit defines digital transactional video as digital retail and digital rental movie and TV content that is delivered across pay TV and online platforms on a strictly transactional basis. Content is accessed on connected and mobile devices, such as PCs, tablets, game consoles, smart TVs and smartphones. The data includes transactional OTT content accessed through apps on TV set-top boxes and includes pay TV video-on-demand (Pay TV VoD) offerings.

Digital retail, also known as ‘electronic sell-thru’ (EST), ‘download-to-own’ (DTO), and ‘digital sell through’, increased 9.9% to A$133 million in 2018 up from A$121 million in 2017. Driving growth was spending on movies EST which grew 17.8% to A$79.7 million in 2018 whilst TV EST has now flattened and remained unchanged at A$53.6 million.

Figure 6: Australia: Consumer Spending, 2011 - 2018

350

300

250

200

150

100

50 Consumer Revenue (AUD Millions) 0 2011 2012 2013 2014 2015 2016 2017 2018

TV VoD TV EST Movie VoD Movie EST

28 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Digital rental, also known as ‘Video-on-Demand (VoD) and ‘Pay-Per-View (PPV)’, grew 13.1% to A$157 million in 2018 compared with a year earlier as consumers become more apt at accessing VoD content and transacting via digital means. In addition, industry promotional advertising campaigns, a strong release slate of English-language titles, an increase in connected device usage and improving infrastructure bolstered transactions which is likely to have resulted in the decision by major discount retailer Kmart to stop selling physical videos in mid-2018.

Digital rental (OTT) revenues for movies and TV content, grew 15.7% to A$70.9 million in 2018 whilst Pay TV VoD rental revenues for movies and TV content, grew 11.1% to A$86.6 million in 2018, due to an increase in Fetch’s IPTV base, the launch of Foxtel’s iQ4 higher-end connected set-top box, shorter release windows, an increase in over-the-top applications and marketing pushes.

Australia’s digital transactional revenues (EST and VoD) was bolstered by higher video volumes in 2018. The number of movie and TV transactions increased 10.5% to 32.6 million compared with the previous year. Digital video transactions are paid-for non-physical retail and rental transactions of Movie and TV content.

Figure 5: Australia: Consumer Transactions, 2011 - 2018

15 Transaction (Millions) 10

0 2011 2012 2013 2014 2015 2016 2017 2018

TV VoD TV EST Movie VoD Movie EST

AHEDA 2018 YEARBOOK 29 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Just over 24 million VoD and 8.5 million EST transactions were made by Australian consumers in 2018 up 13.3% and 3.3% respectively. Movie content transactions increased 13.1% to 28.3 million on the back of solid growth in both Movie VoD (13.3%) and Movie EST (12.3%) transactions. But not all was growth as the number of TV transactions, almost entirely TV EST transactions, declined 4.1% to just under 4.3 million. Consumers preference for watching TV content via digital subscription services ensured TV content consumed on a rental basis (TV VoD) remains niche accounting for less than 1% of total transactions in 2018.

Movie VoD saw its share of total digital transactions improve two-percentage points to 74% in 2018. The increase came at the expense of TV EST transactions which experienced a two-percentage point decline in volume to 13% over the same period. Movie EST’s share of consumer transactions by a digital service remained unchanged at 13%.

Figure 7, 8:

Australia: Consumer Transactions Australia: Consumer Transactions by digital service, 2017 by digital service, 2018

0% 0% 13% 15% 13% 13%

72% 74%

TV VoD TV EST Movie VoD Movie EST TV VoD TV EST Movie VoD Movie EST

Movie VoD and Movie EST saw their share of consumer spending improve one-percentage point to 54% and 27% respectively in 2018. VoD’s share of total consumer spending is however less than that of transactions as EST content holds a significantly higher share of revenues due to the higher price point charged for content digital ownership. TV EST held a 19% share of total consumer spending from digital transactional video in 2018.

30 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Figure 9, 10:

Australia: Consumer Spending Australia: Consumer Spending by digital service, 2017 by digital service, 2018

0% 0% 21% 19% 26% 27%

53% 54%

TV VoD TV EST Movie VoD Movie EST TV VoD TV EST Movie VoD Movie EST

A closer look into consumer transactions by month over the past five years reveals a seasonal trend in Australian digital sales. The summer holiday period in December and January are proven peak transactional periods for digital content. This peak demand period stems from the gifting of hardware and vouchers for Christmas as consumers’ cash in their vouchers to purchase digital content for their existing and new hardware as well as families spending more time together to watch content over the holiday period. Furthermore, an increasing involvement in the rise of significant shopping events such as Black Friday and Cyber Monday sales helped bolster transactions in November 2018 which given its continual rise in popularity across Australia looks likely to continue generating solid sales in the month of November. Having said this, it is still common for digital sales to fluctuate from month-to-month given they are highly susceptible to the movie and TV release slate for the period.

AHEDA 2018 YEARBOOK 31 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Figure 11: Australia: Monthly Consumer Transactions, 2014 - 2018

4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Transactions (MIllions) 0.0 Jun 15 Jun 16 Jun 17 Jun 18 Jun Apr 15 Apr 16 Apr 17 Apr 18 Apr Oct 15 Oct 16 Oct 17 Oct 18 Feb 15 Feb 16 Feb 17 Feb 18 Feb Aug 17 Aug Aug 15 Aug 16 Aug 18 Aug Dec 14 Dec 15 Dec 16 Dec 17 Dec 18

TV VoD TV EST Movie VoD Movie EST

Figure 12: Australia: Monthly Consumer Spending, 2014 - 2018

0 Consumer Revenue (Millions) Jun 15 Jun Jun 16 Jun Jun 17 Jun Jun 18 Jun Apr 15 Apr Apr 16 Apr Apr 17 Apr Apr 18 Apr Oct 15 Oct 16 Oct 17 Oct 18 Feb 15 Feb Feb 16 Feb Feb 17 Feb Feb 18 Feb Aug 17 Aug Aug 15 Aug Aug 16 Aug Aug 18 Aug Dec 14 Dec 15 Dec 16 Dec 17 Dec 18

TV VoD TV EST Movie VoD Movie EST

32 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

The average price to rent a digital movie remained stable at a cost of A$5.70 including a 10% Goods and Services Tax (GST) in 2018 compared with the previous year. Consumers did however pay more on average to purchase a digital movie and TV title in 2018 up 3.9% to A$15.97 and 4.8% to A$11.17 respectively.

In early 2019, Academy award nominees for Best Picture, A Star Is Born and Bohemain Rhapsody were available in high-definition (HD) format on the Apple iTunes store to buy for A$24.99 and rent for A$6.99. The boxing drama sequel Creed II was available for A$19.99 to buy and $6.99 to rent whilst its predecessor Creed was available for A$14.99 to buy and A$4.99 to rent. The price is the same for both movies in either the SD or HD format. The entire season eight of the TV show Suits was available in HD format for A$39.99 or consumers may purchase a single episode for A$3.49. Alternatively, consumers may secure the entire season for A$36.99 and a single episode for A$2.99 in the standard definition format.

Figure 13: Australia: Monthly Consumer Transactions, 2014 - 2018

20 18 16 14 12 10 8 6 4 2 0 Jul 18 Jul Jul 17 Jul Jul 16 Jul Jul 15 Jul Jan 18 Jan Jan 17 Jan Jan 16 Jan Consumer Average Selling Price, AUD Mar 18 Mar 17 Mar 16 Mar 15 Nov 17 Nov Nov 18 Nov Nov 16 Nov Nov 15 Nov Sep 18 Sep 17 Sep 16 Sep 15 Dec 14 May 18 May May 17 May May 16 May May 15 May

TV VoD TV EST Movie VoD Movie EST

AHEDA 2018 YEARBOOK 33 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

AUSTRALIAN DIGITAL SUBSCRIPTION MARKET

The online video subscription business model is growing fast in Australia on the back of an increase in local and original content as well as the relative affordability of such services to access this content. There were nearly 9.2 million paying subscriptions to online video services in 2018, up from just under 6.7 million in 2017. Nearly $1.4 billion was spent by consumers on OTT subscription services in 2018, up 56% compared with a year earlier. Consumer spending will continue to rise over the forecast period to just over $2.5 billion in 2022 according to IHS Markit.

Netflix continues to strengthen its leadership position in the Australian online video subscription market following a sharp 46% rise in subscribers in 2018 compared with the previous year. Australia, being one of Netflix’s key English-speaking markets, benefits from increasing content spend on English-language original and Australian local content. 2018 saw the release of Netflix’s first Australian original series Tidelands in the second half of 2018. Despite increasing the price of its service in the US by 30% to US$13 (A$18) a month in January 2019, Netflix has not yet implemented a similar rise in Australia. The company last increased the price of its standard plan from A$12 – A$14 in July 2015 which it attributed to the introduction of the Goods and Services Tax (GST) on digital products. Netflix’s price plans were basic (A$9.99), standard (A$13.99) and premium (A$17.99) per month in March 2019.

The number of Netflix subscribers reached just under 5.2 million by the end of 2018. As such, Netflix accounts for the largest share in the Australian online video subscription market with just under 57% of total subscribers, followed by Foxtel Now and Stan with 14% and 13% shares respectively.

Netflix signed a deal with Foxtel in February 2019 to co-produce an Australian TV show which will likely result in Foxtel subscribers being able to stream Netflix via their pay TV set-top box. Furthermore, the deal will likely boost the local production industry by facilitating the delivery of locally-produced shows to Netflix’s global audience.

Local provider Stan by Nine Entertainment continues to find favour with local audiences on the back of its original content. Stan has produced and premiered several Australian original TV series including Wolf Creek, No Activity, Plonk and most recently Bloom in January 2019. Stan increased the price of its standard plan from A$12 – A$14 a month and its premium plan from A$15 – A$17 a month on 1 March 2019, bringing its standard price in line with rival Netflix. Stan’s price plans were basic (A$10), standard (A$14) and premium (A$17) per month in March 2019.

Stan reached more than 1m active subscribers in H1 2018, 3 years after launch. Local content has been Stan’s key differentiator from Netflix. Strategic partnerships with local and international players will drive further growth for Stan following the merger with Nine and its deal signed with Disney in December 2018. Under agreement, Stan will stream Disney movie and TV content on its service including blockbuster movie titles Frozen and The Lion King, as well as content from the Pixar stable and Star Wars and Marvel franchises. Disney’s direct-to-consumer streaming platform called Disney+ will launch in the US in late 2019. A launch of Disney+ in Australia is yet to be disclosed and as such the extent of its impact on Stan undetermined.

34 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Amazon Prime Video remains small in the market, where it is still in a crucial research stage as it determines consumer interest and establishes its brand in a variety of markets within Australia. Prime Video subscribers grew significantly in 2018, albeit from a small base, to 36,500 subscribers by the end of 2018 and are forecast to grow to around 340,000 subscribers by the end of 2022. However, this base may increase significantly if the global online retailer can spark consumers’ interest in its content offering. This is likely given Amazon is spending billions of dollars a year to secure rights to popular TV shows such as The Grand Tour as well as original content including shows such as Le Mans, Patriot, Goliath and American Gods. The price of a Prime Video membership is competitive in the market at A$6.99 per month or A$59 for an annual subscription if paid upfront. A 30-day free trial of the service was available in March 2019.

Meanwhile, Eros International’s on-demand Bollywood and regional language content including Indian films, music and original shows continues to carve out a niche audience.

The newest providers to the Australian OTT subscription market are Foxtel’s dedicated multi-sports service Kayo Sports, 10 All Access and iWonder:

• Kayo Sports: Launched in November 2018, Kayo Sports offers over 50 sports live and on-demand starting from A$25 a month which has quickly found favour with sports lovers. The service reached the 100,000 paying subscriber milestone in February 2019. Driving take-up was summer cricket matches during 4Q 2018 and 1Q 2019. The company is well positioned for further take-up over 2Q and 3Q 2019 as it holds broadcast rights to several popular winter sports notably Australian Football League (AFL) and National Rugby League (NRL) matches.

To further drive take-up Kayo Sports announced in February 2019 a first-time collaboration with News Corp Australia to provide a bundled news and sports streaming subscription package. The package will provide subscribers with a digital subscription to News Corp newspapers featuring pre- and post-match analysis, opinions and statistics to complement match broadcasts. Combined with Foxtel’s standalone service Foxtel Now and the company’s value-add multiscreen proposition Foxtel App, the total number of OTT subscribers and users to the company’s suite of services reached just over 2.2 million by the end of 2018.

• 10 All Access: Launched in December 2018 by Australian commercial free-to-air broadcaster Network 10 and its parent CBS Corporation. The device-based 10 All Access service (known as CBS All Access in the US) offers 7,000 episodes including three original series One Dollar, Strange Angel and Tell Me A Story as well as popular seasoned TV series The Bachelor, MacGyver and NCIS. First month is free prior to a monthly charge of A$9.99 per month.

• iwonder: Launched in March 2019, iwonder offers over 500 hours of documentary and current affairs programming across 1,000 titles. First month is free prior to a monthly charge of A$6.99 or A$69.99 for an annual subscription

AHEDA 2018 YEARBOOK 35 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Figure 36: Australia: OTT Subscription landscape, 2018 - 2022

100%

90%

80% Others Amazon 70% Quickﬂix Kayo Sports 60% Eros Now 50% YouTube Premium Foxtel App Share of Subscribers 40% Stan 30% Foxtel Now Netﬂix 20%

10%

0% 2018 2022

Notable ad-supported video services in Australia include YouTube, Facebook Watch, ABC iView by Australia Broadcasting Corporation and 7plus by free-to-air TV broadcaster Seven Network.

36 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

AUSTRALIAN PAY TV MARKET

PAY TV LANDSCAPE

Total pay TV subscribers in Australia remained stable at just over 3.6 million by the end of 2018 largely due to a rise in Fetch TV subscribers which offset the decline in the subscriber base of Australia’s leading pay TV operator Foxtel. Fetch TV, backed by Malaysian operator Astro All Asia Networks, continues to build its IPTV service, the pitch for which is popular content made affordable and easy to access. Fetch TV packages its content into four premium channel packs, namely Kids Pack, Knowledge Pack, Vibe Pack and Variety Pack, which cost A$6 per month per pack, with all four packs offered via the Ultimate Pack package for A$20 per month. The company also continues to expand its offering, announcing a partnership with Discovery Networks in January 2018 and subsequently adding Discovery Channel and TLC to its channel line-up in March 2018 which helped the company attain 95,000 subscribers in 2018 whilst also providing access to 3rd party OTT video services including YouTube, Netflix and Stan.

Foxtel experienced a decline of 1.7% in its combined cable and satellite subscriber base to just over 2.7 million by end 2018 compared with a year earlier. However, its virtual pay TV service Foxtel Now and more recently Kayo Sports has helped Foxtel offset the decline in its cable and DTH base. Foxtel is owned by News Corp (65%) and Australia’s incumbent telco Telstra (35%).

The pay TV industry in Australia continues to face significant challenges from the growth of online subscription video services as consumers continue to embrace Internet-connected devices to stream content, particularly on a live and on-demand basis. In addition, Australia’s free-to-air (FTA) digital terrestrial television (DTT) broadcasters have continued to enhance their offerings with new services and original programming. For example, Seven Network launched 7plus, an ad-funded online video streaming service in November 2017 which features exclusive original content in addition to live and on demand content.

Figure 15: Australia: Pay TV subscribers by operator, 2014 - 2018

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1.0 Subscribers (Millions) 0.5

0.0 YE 2014 H1 2015 YE 2015 H1 2016 YE 2016 H1 2017 YE 2017 H1 2018 YE 2018

Foxtel (Cable) Foxtel (Satellite) Optus TV (Cable) TransACT TV (IPTV) Fetch TV (IPTV)

AHEDA 2018 YEARBOOK 37 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Just over 37% of Australian TV homes subscribed to a pay TV service by the end of 2018, down slightly from 38% a year earlier as operators compete against several OTT options now available in the country. By comparison, the Netherlands primary pay TV penetration is the highest in the world at just over 98% in 2018, followed by South Korea and Belgium at a rate of 96% whilst neighbouring New Zealand was slightly higher at just over 39%. In an attempt to drive new growth, pay TV operators are diversifying their proposition offering digital options. One such example is Foxtel’s launch of its streaming service Kayo Sports in November 2018 leveraging premium sports rights to reach a new audience. This virtual pay TV alternative to its cable and satellite service is lower priced than its traditional pay TV service to reach people who prefer to pay less and are primarily interested in sports.

Note: IHS Markit measure Primary Pay TV penetration rates to remove the double counting of homes with more than one service or platform so that relevant totals never exceed 100% of TV households. Where Primary homes are equal to Total homes, it indicates an assumption of 100 per cent primary set usage for that platform.

Figure 35: Primary Pay TV Penetration by country, 2018

100 90 80 70 60 50 40 30 20 10 Primary Pay TV Penetration (%) 0 UK USA Italy Italy UAE UAE Peru Peru India Chile Israel Malta Spain China Qatar Qatar Brazil Latvia Latvia Oman Kenya Kenya Japan Japan Russia Russia Turkey Turkey Serbia France France Taiwan Taiwan Poland Poland Ireland Mexico Mexico Cyprus Croatia Croatia Kuwait Kuwait Nigeria Finland Austria Austria Greece Belarus Ukraine Bahrain Canada Norway Norway Sweden Georgia Belgium Vietnam Vietnam Slovenia Slovenia Bulgaria Thailand Thailand Armenia Moldova Moldova Hungary Slovakia Slovakia Malaysia Malaysia Lebanon Lebanon Portugal Australia Australia Romania Romania Germany Lithuania Denmark Colombia Argentina Venezuela Venezuela Singapore Singapore Philippines Macedonia Hong Kong Hong Kong Switzerland Switzerland South Korea South Korea Netherlands South Africa Saudi Arabia Luxembourg Luxembourg New Zealand Czech Republic Republic Czech

38 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

THE AUSTRALIAN DIGITAL MARKET IN CONTEXT

The Australian digital market performed well on the world stage in 2018. Combined digital retail, digital rental and pay TV VoD transactions grew 10.5% to 37.5 million in 2018 which was a higher rate of year-on-year growth in digital video transactions than several advanced economies including the UK (6.6%), Spain (6.7%), Italy (7.3%) and the US (7.7%). However, growth in the German digital market outperformed Australia, up 13.5% to just over 95 million transactions whilst French digital video transactions declined 10% to 53 million after a 3.2% increase in EST transactions was not enough to offset a 12.5% plummet in VoD transactions. US transactions far outweigh those of the aforementioned countries reaching 555 million in 2018 up from 516 million in 2017.

Figure 26: VoD and EST Transactions (Millions)

600 100 90 500 80 70 400 60 50 300 40 200 30 Transactions (MIllions) 20 100 10 0 0 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018

France Germany Italy Spain UK Australia US

EST VoD

In terms of transactions per capita, Australia punches well above its weight to record the same number of VoD transactions per person as in the US at 1.1 in 2018. However, US consumers each made an average of 0.6 EST transactions per capita slightly higher than the 0.4 transactions made per Australian. Having said this, Australia leads the Big 5 European territories in combined VoD and EST transactions per capita with an average of 1.5 transactions per person in 2018. By comparison, VoD and EST transactions per capita reached 1.1-1.2 (Germany and UK), 0.8 (France), Italy (0.4) and Spain (0.3) of which the last two countries post low tallies due to rampant piracy.

AHEDA 2018 YEARBOOK 39 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Figure 27: VoD and EST Transactions per capita

14 12 10 8 6 4 2 0 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018

Consumer Revenue per capita, USD France Germany Italy Spain UK Australia US

Comparing Australian digital video transactional consumer revenue in US dollar terms puts the value of several advanced economies in perspective relative to Australia. Unsurprisingly, the vast size of the US digital market dwarfs’ other major economies when put in comparison. US consumer revenue from EST and VoD reached almost US$4.3 billion in 2018 compared with UK (US$610 million), Germany (US$523 million), France (US$278 million), Australia (US$217 million), Italy (US$110 million) and Spain (US$75 million).

Figure 28: VoD and EST Consumer Revenue (USD, Millions)

700 7,000

600 6,000

500 5,000

400 4,000

300 3,000

200 2,000 100 1,000 0 Consumer Revenue (USD, Millions) 0 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018

France Germany Italy Spain UK Australia US

EST VoD

40 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Figure 29: VoD and EST Consumer Revenue per capita, USD

14 12 10 8 6 4 2 0 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018

Consumer Revenue per capita, USD France Germany Italy Spain UK Australia US

Australian digital transactional movie prices are largely in line with the rest of the world. Digital purchase prices are significantly higher than rental price. Most Big 5 European territories along with Australia pay a little over US$12 to purchase a digital movie with the exception being France which paid $13.54 on average in 2018. By comparison, digital movies cost an average of US$14.54 in the US whilst an OTT movie rental cost an average of US$4.73. Pay TV rental services charge a slightly higher US$5.38 to rent a movie in the US. This contrasts with Australia where renting a movie via a pay TV service was slightly less expensive than via an OTT provider at US$4.01 and US$4.37 respectively.

Figure 30: 2018: Average Transactional Movie Price, USD

8 USD 6

0 France Germany Italy Spain UK Australia US

Pay TV Rental (Movies) Digital Retail (Movies) Digital Rental (Movies)

AHEDA 2018 YEARBOOK 41 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

DIGITAL IN THE WIDER VIDEO SECTOR

Digital video consumption is driving a resurgence in the home entertainment market as consumers are watching more content in their living rooms than ever before via array of connected and mobile devices. Total video (digital and physical) spending increased 26% to almost $2.2 billion in 2018 compared with a year earlier. Digital video spending (whether via the open internet or pay TV VoD services) surged 46% to nearly A$1.7 billion in 2018 which was enough to offset the 12.7% decline to A$518 million in physical video (DVD, Blu-ray Discs, retail and rental) spending over the same period. Digital subscriptions led the surge up 56% to almost A$1.4 billion whilst digital retail (9.9%), digital rental (15.7%) and pay TV VoD (11.1%) also experienced healthy growth.

Despite digital’s rise to prominence in the home entertainment market, physical video spending is holding up relatively well in Australia due to a mix of traditional habits and new barriers to digital video adoption. Australia has long had an association with DVD and Blu-ray Discs when they came to market offering superior picture and sound quality to that of the VHS format. For many, these physical discs still suffice for their home viewing which has slowed the decline in physical video sales in recent years. Physical video sales accounted for a 24% share of total video spending in 2018. Meanwhile, consumers across the country are still waiting on better internet connectivity with higher average connection speeds before making the transition to digital video services.

IHS Markit forecast total consumer spending on home video in Australia will continue to exhibit strong growth over the next five years increasing almost 60% over 2018 levels to reach just under A$3.5 billion in spending by 2022.

Figure 31: Australia: Total video spending, AUD billion (Fixed exchange rate)

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AUD billion (Fixed exchange rate) 2017 2018 2019 2020 2021 2022

Physical retail Physical rental Pay TV VoD Digital retail Digital rental Digital subscription

42 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

AUSTRALIAN FILMED ENTERTAINMENT INDUSTRY TRENDS

Australians are enjoying more filmed entertainment – through physical, digital, Pay TV and theatrical distribution – than ever before as consumer spending across the industry continues to strengthen, up 8.2% to just over A$6.1 billion in 2018 compared with the previous year.

Cable and satellite subscribers continue to hold the lion’s share of total spending on filmed entertainment accounting for a 44% share in 2018.

Digital video consumption continues to grow its importance in the industry passing the total amount consumers spent at the box office for the first time in 2018. Digital video consumption – digital retail, rental, subscription and pay TV VoD – grew almost 44% to nearly A$1.7 billion to account for a 27% share of total filmed entertainment consumer spending in 2018, up from a 20% share in 2017. The rise in digital video consumption is even more impressive given theatrical spending grew 3.7% to almost A$1.3 billion over the same period, which represented a 20% share of total Australian filmed entertainment spending in 2018.

Meanwhile, the contraction in physical video spending continued in 2018 after physical retail spending declined 11.3% to A$509 million and physical rental spending more than halved to A$8.8 million.

IHS Markit forecast consumer spending on total filmed entertainment will grow to just under 24% from A$6.1 billion in 2018 to A$7.6 billion in 2022.

Figure 33, 34:

Australia: Total filmed Australia: Total filmed entertainment industry consumer entertainment industry consumer spending split by segments, 2018 spending split by segments, 2022 (Fixed exchange rate)

Physical retail Physical retail 23% 8% 4% 0% 0% Physical rental Physical rental Theatrical 38% Theatrical 19% 20% Cable and sat subs Cable and sat subs 1% Pay TV TVoD Pay TV TVoD 2% Digital retail Digital retail Digital rental Digital rental 2% Digital subscription Digital subscription 1%

2% 35% 44% 1%

AHEDA 2018 YEARBOOK 43 AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Growth in the Australian combined digital transactional video market is expected to slow down over the next five years as competition from digital subscription services, free-to-view TV and multiscreen services offer viewers increased access to new and original content. Furthermore, the competitive advantage of featuring new release content that transactional digital services used to enjoy is diminishing. Despite this slowdown, IHS Markit forecast digital transactional spending will still grow a healthy 7.4% to A$312m in 2019.

Online video subscription services are increasingly producing original movie and TV content to attract and retain subscribers. Consequently, IHS Markit forecast digital subscription services will improve their combined share of total filmed entertainment spending from 23% in 2018 to 38% in 2022. Growth will largely come at the expense of cable and satellite subscriptions which will see their importance decline from a 44% share to 35% over the same period.

CONCLUSION

The Australian digital video market has gone from strength to strength over the past six years and 2018 was no exception as digital video consumption experienced another rapid rise, up 46% to nearly A$1.7 billion. Driving growth in the digital video market are the following:

• Increase in the online availability and range of high quality original and local content; • Continual development of broadband infrastructure including the expansion of 4G and 5G networks; • Improvement in consumer’s comfort and familiarity at streaming and transacting via digital means; • More affordable mobile data price plans; • Increase in marketing activity by industry and involvement in significant shopping events such as Black Friday and Cyber Monday; • A rise in the installed base of connected and mobile devices that can be used for online video consumption; • Online video service providers’ partnerships with telcos and pay TV operators is increasing the access to and visibility of online video services in the marketplace; and • The entrance and expansion of new local and international online video providers in recent years has ensured intense competition in the market which in turn has improved the flexibility of online video services in terms of access and usage.

Growth in the digital transactional retail and rental sectors was impressive in 2018, up 11.6% to A$291 million on the back of a strong release slate including big blockbuster titles Avengers: Infinity Wars, Solo: A Star Wars Story and The Greatest Showman as well as consumers becoming more apt at transacting via digital means. In addition, industry promotional advertising campaigns, an increase in connected device usage and improving infrastructure bolstered transactions which is likely to have resulted in the decision by major discount retailer Kmart to stop selling physical videos in mid-2018. However, growth in the digital transactional video market over the next five years is expected to slow down under effect of the rise in subscription video. IHS Markit forecast digital transactional spending will grow 7.4% to A$312m in 2019 and just under A$350 million in 2022.

44 AHEDA 2018 YEARBOOK AUSTRALIAN DIGITAL VIDEO MARKET IN 2018

Digital subscription spending grew 56% to almost A$1.4 billion in 2018, up from A$880 million in 2017 as providers increase their offering of local and original content. Competition is particularly intense among market leader Netflix, home-grown service Stan, standalone virtual pay TV offer Foxtel Now and most recently the dedicated multi-sports online channel Kayo Sport. IHS Markit forecast consumer spending on digital subscription services will continue to perform exceptionally well over the next five years, as consumers double their spending on such services to A$2.8 billion in 2022.

The Australian pay TV subscriber base remained stable in 2018 as growth in Fetch TV’s customer base offset a decline in the combined number of cable and satellite subscriptions to the service of pay TV leader Foxtel. The contraction in physical video (DVD, Blu-ray Discs, retail and rental) spending continued in 2018, down 12.7% to A$518 million which in the context of the rapid rise in alternate forms of entertainment is holding up relatively well.

Australians across all demographics rely on both the inbuilt applications and added functionality of Smart TVs allowing them to connect to consoles, pay TV boxes and Internet connected streaming sticks and boxes to access the content they want to watch. The younger age group of 18-24 years are more likely to own each type of these living room devices other than a free view/pay TV set-top box which is more common in a home of a person aged 55-64 years.

2018 marks a significant milestone in the history of Australia’s filmed entertainment industry. Australian consumers spent more on digital video than at the box office for the first time. Consumer spending on digital video via the open internet or pay TV VoD services grew 44% to almost A$1.7 billion in 2018 compared with a 3.7% increase in theatrical spending to A$1.3 billion over the same period. IHS Markit forecast consumer spending on digital video in Australia will reach A$3.2 billion in 2022.

The increasingly crowded Australian online video space will require providers to deliver on content, innovation and engagement to succeed. A strong local proposition is required to capture the Australian audience, which demands quality content and convenience at a competitive price.

Despite these challenges, the outlook for the Australian filmed entertainment industry remains positive after rising 8.2% to just over A$6.1 billion in 2018. IHS Markit expects consumer spending on filmed entertainment to reach nearly A$7.6 billion by 2022.

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46 AHEDA 2018 YEARBOOK VIDEO ENTERTAINMENT AUSTRALIA: PHYSICAL RETAIL MARKET

COMBINED PHYSICAL AND DIGITAL

Australians love watching Video Entertainment content. Box office revenue grew in 2018, digital sales increased and the physical disc market was very resilient, with Australia having a much higher purchase rate than other countries and premium formats like 4K registering strong growth.

In 2018, the Video Entertainment market generated $840 million, as 72 million units were rented or purchased either physically or digitally. This marks Video Entertainment as the third largest category that GfK measures, across over 50 categories here in Australia. This is not taking into account the revenue from streaming services such as Netflix or Stan.

For the first time in 2018, digital volume surpassed physical volume, with digital volume accounting for 52% of total Video Entertainment volume. With a higher average price and growth through premium formats, physical still accounts for two thirds of total value.

Piracy levels have also dropped to record lows in 2018, helped by government initiatives and the rising availability of content through legal means. For more information on piracy and the digital streaming services please read the GfK chapter on consumer digital trends.

GfK Retail Tracking: Video Entertainment Market By Type

Units Share % Value Share %

24% 28% Digital 35% 41% 44% 52% (EST+VOD) 5% 4% 3% Rental 11% 10% (Physical) 7% Retail 71% (Physical) 68% 62% 48% 46% 40%

2016 2017 2018 2016 2017 2018

Note: Data factored to 100% YTD Dec 2018

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HISTORICAL TRENDS

The physical disc retail market remains the largest sector within Video Entertainment. Sales have softened since a peak in 2009, however more than $500 million was generated in 2018 with nearly 30 million discs sold.

GfK Retail Tracking: Physical Retail Market Size

$1.6 Total Value $1.39 100 $1.35 $1.29 $1.4 Total Units $1.26 $1.24 $1.15 80 $1.2 $1.06 $1.09 Billions

$0.98 Millions $0.94 $0.95 $0.90 $1.0 60 $0.71 $0.74 $0.8 $0.63 $0.6 $0.50 $0.52 40 $0.4 $0.27 $0.22 20 $0.2 $0.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GfK Retail Tracking: Physical Retail Market Size

$1.6

$1.4 Blu-ray $0.1 $1.2 DVD $0.1 $0.2 Billions $0.2 $1.0 VHS $0.2 $0.1 $0.8 $0.1 $0.1 $0.6 $1.3 $1.3 $1.3 $1.1 $1.1 $1.1 $0.1 $0.9 $0.9 $1.0 $0.9 $0.1 $0.4 $0.6 $0.8 $0.8 $0.4 $0.6 $0.5 $0.2 $0.1 $0.4 $0.0 $0.2 $0.2 $0.2 $0.1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

48 AHEDA 2018 YEARBOOK VIDEO ENTERTAINMENT AUSTRALIA: PHYSICAL RETAIL MARKET

CURRENT TRENDS

The Australian disc market is very resilient, especially when compared with other countries. The per capita purchase rate of discs in Australia ranks much higher than other countries. In Australia, 1.15 discs are bought per person, with Germany being the next closest at 0.70.

2018 saw a decline in physical disc volume as the digital formats continue to increase in share. There were ranging changes within retail in 2018 that contributed to this. Excluding those retail changes, the rate of decline has actually slowed in 2018 compared to 2017.

GfK Retail Tracking: Physical Discs Per Capita Purchase 2018

Australia 1.15 Germany 0.70 Austria 0.66 New Zealand 0.60 Finland 0.49 Sweden 0.49 France 0.43 Norway 0.39 Japan 0.26 Italy 0.22 Spain 0.10 Portugal 0.09

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40

Note: Population figures sourced from WorldOMeters.info

The top selling titles were all movies titles, with no TV titles ranked within the top 10 in volume. The Greatest Showman by 20th Century Fox and starring Australia’s Hugh Jackman was the number 1 selling title, followed by the super hero blockbuster Marvel Avengers: Infinity War for Walt Disney Studios. 5 of the top 10 selling titles belonged to super hero franchises.

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GfK Retail Tracking: Top Selling Titles, Full Year 2018, Ranked By Volume

RANK TITLE DISTRIBUTOR GENRE 1 THE GREATEST SHOWMAN 20TH CENTURY FOX DRAMA 2 MARVEL THE AVENGERS INFINITY WAR WALT DISNEY STUDIOS ADVENTURE 3 STAR WARS EPISODE VIII THE LAST JEDI WALT DISNEY STUDIOS SCI-FI 4 THOR RAGNAROK WALT DISNEY STUDIOS ACTION 5 DEADPOOL 2 20TH CENTURY FOX ACTION 6 JUMANJI (2017) WELCOME TO THE JUNGLE SONY PICTURES ADVENTURE 7 BLACK PANTHER (2018) WALT DISNEY STUDIOS ACTION 8 JURASSIC WORLD 2 FALLEN KINGDOM UNIVERSAL ADVENTURE 9 PETER RABBIT (2018) SONY PICTURES FAMILY 10 JUSTICE LEAGUE (2017) ROADSHOW ACTION

Ranked by value, the ever popular Game of Thrones comes into the top 10, the only title that was released before 2018 to make it into the top 10 sellers for the year.

GfK Retail Tracking: Top Selling Titles, Full Year 2018, Ranked By Value

RANK TITLE DISTRIBUTOR GENRE 1 THE GREATEST SHOWMAN 20TH CENTURY FOX DRAMA 2 MARVEL THE AVENGERS INFINITY WAR WALT DISNEY STUDIOS ADVENTURE 3 STAR WARS EPISODE VIII THE LAST JEDI WALT DISNEY STUDIOS SCI-FI 4 THOR RAGNAROK WALT DISNEY STUDIOS ACTION 5 DEADPOOL 2 20TH CENTURY FOX ACTION 6 BLACK PANTHER (2018) WALT DISNEY STUDIOS ACTION 7 JUMANJI (2017) WELCOME TO THE JUNGLE SONY PICTURES ADVENTURE 8 JURASSIC WORLD 2 FALLEN KINGDOM UNIVERSAL ADVENTURE 9 JUSTICE LEAGUE (2017) ROADSHOW ACTION 10 GAME OF THRONES SEASON 7 ROADSHOW TV DRAMA

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SEASONALITY

The disc market recorded a year-on-year decline of 17% in volume in 2018, with the largest decline coming through quarter 4. Roadshow’s Game of Thrones Season 7 was released in Q4, 2017 and was the top selling title at the time, generating over $6 million in value.

GfK Retail Tracking: Physical Discs Per Capita Purchase 2018

15 Millions 2015 10 2016 2017 5 2018 0 Q1 (-16%) Q2 (-16%) Q3 (-17%) Q4 (-20%)

The larger decline in Q4 meant the quarter recorded its lowest share of total sales in the last 6 years, down to 28% of yearly volume. Q2 (April – June) was the second largest for volume sales, due in part to big releases such as Fox’s The Greatest Showman, Sony Pictures Jumanji: Welcome to the Jungle, and Disney’s Black Panther.

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GfK Retail Tracking: Market Seasonality by Quarter - Volume Shares

2013 22% 24% 22% 32% 2014 24% 23% 24% 30% 2015 22% 22% 25% 31% 2016 23% 23% 23% 31% 2017 22% 25% 24% 29% 2018 23% 25% 24% 28%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Quarter 1 Quarter 2 Quarter 3 Quarter 4

GfK Retail Tracking: Market Seasonality by Quarter - Value Shares

2013 22% 23% 22% 34% 2014 23% 22% 23% 31% 2015 22% 21% 24% 33% 2016 23% 23% 22% 32% 2017 22% 24% 24% 30% 2018 23% 25% 24% 29%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Looking at the monthly trends, a particular month to note is November 2018, which recorded a higher share than November 2017. One factor in this was the Black Friday sales, where we saw the lowest decline of any week within quarter 4, 2018. Sales through online promotions such as Black Friday is one potential area of development for Video Entertainment.

52 AHEDA 2018 YEARBOOK VIDEO ENTERTAINMENT AUSTRALIA: PHYSICAL RETAIL MARKET

GfK Retail Tracking: Market Seasonality by Month - Volume Shares

2013 8% 5% 8% 8% 7% 9% 8% 6% 8% 7% 9% 16% 2014 9% 6% 9% 7% 8% 8% 9% 7% 8% 6% 7% 16% 2015 8% 6% 8% 7% 7% 8% 8% 7% 9% 6% 7% 17% 2016 8% 6% 9% 8% 7% 8% 7% 7% 9% 7% 8% 17% 2017 8% 6% 9% 7% 7% 10% 8% 7% 9% 6% 7% 15% 2018 8% 6% 9% 7% 8% 10% 8% 7% 9% 6% 8% 14%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

GfK Retail Tracking: Market Seasonality by Month - Value Shares

2013 8% 5% 9% 7% 7% 8% 7% 6% 9% 7% 9% 18% 2014 8% 6% 9% 7% 8% 8% 8% 7% 9% 7% 7% 17% 2015 8% 6% 8% 7% 6% 8% 8% 7% 9% 7% 8% 19% 2016 7% 6% 9% 8% 7% 8% 7% 6% 9% 7% 8% 17% 2017 8% 6% 9% 8% 7% 9% 7% 7% 9% 6% 7% 16% 2018 8% 6% 9% 8% 8% 9% 8% 7% 9% 6% 8% 15%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

The effect of Black Friday has been felt in other industries. Utilising the GfK point-of-sales data across Video Entertainment and all of the hardware categories that GfK measures, the sales for Black Friday increased by 22% in 2018. The growth rate has increased each year.

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GfK Retail Tracking: All POS Categories, Black Friday Week Value Growth %

22%

14%

2016 2017 2018

It is likely that the impact of Black Friday will increase in 2019 and beyond as consumer awareness continues to grow and they plan their shopping around these promotional events.

FORMAT TRENDS

Blu-ray continued to be a relative bright spot in the physical disc market, selling 4.6 million discs for a value of $101 million. The 7% decline in Blu-ray value was much lighter than DVD, which declined by 20%.

GfK Retail Tracking: Blu-ray Volume Sales (Millions)

7.82 7.85 6.98 6.82 6.36 5.31 4.92 4.60 3.74 1.79 0.71

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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GfK Retail Tracking: Blu-ray Value Sales (Millions)

$164 $168 $162 $146 $137 $119 $109 $95 $101 $63 $27

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Blu-ray now accounts for almost 20% of the market value, the highest share it has ever taken. The increase in share for Blu-ray (from 17.2% in 2017 to 19.4% in 2018) was also the largest share increase for any year on record.

GfK Retail Tracking: Blu-ray Percentage of Market

21.0% 19.0% 19.4% 17.0% 17.2% 16.0% 15.9% 15.0% 14.9% 14.9% 14.6% 14.8% 14.1% 13.1% 13.0% 12.7% 12.5% 12.7% 12.9% 12.3% 11.0% 9.0% 9.7% 7.0% 5.0% 2011 2012 2013 2014 2015 2016 2017 2018

Volume Value

The highest Blu-ray value share was recorded in New Release movies, where Blu-ray contributes 30% of value. This was driven by titles such as Disney’s Star Wars Episode 8: The Last Jedi and Marvel Avengers: Infinity War.

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GfK Retail Tracking: Blu-ray Value Share % of each Release Type

30% 27% 27% 28% 25% 25% 23% 22% 21% 22%

14% 10% 9% 8% 8% 8% 8% 8% 6% 7%

New Release Movies Catalogue Movies TV Series Other Direct to Video

2014 2015 2016 2017 2018

Blu-ray also registered a value share increase in Catalogue Movies, accounting for 25% of value, the highest share it has ever recorded. This was led by Roadshow’s Lord of the Rings boxset, with Blu-ray generating 71% of the title’s value.

GfK Retail Tracking: Blu-ray Value Share % of Title

LORD OF THE RINGS BOX SET 71% BLUE PLANET II 57% BLADE RUNNER 2049 57% SOLO A STAR WARS STORY 54% STAR WARS EPISODE VIII THE LAST JEDI 54% READY PLAYER ONE 53% MARVEL THE AVENGERS INFINITY WAR 52% ANT-MAN AND THE WASP 49% JUSTICE LEAGUE (2017) 48% DEADPOOL 2 48%

Note: Filtered to top 200 sellers in 2018 (ranked by value). Excludes titles only released on Blu-ray

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GfK Retail Tracking: Top Selling DVD Titles, Full Year 2018, Ranked By Volume

RANK TITLE DISTRIBUTOR GENRE 1 THE GREATEST SHOWMAN 20TH CENTURY FOX DRAMA 2 JUMANJI (2017) WELCOME TO THE JUNGLE SONY PICTURES ADVENTURE 3 MARVEL THE AVENGERS INFINITY WAR WALT DISNEY STUDIOS ADVENTURE 4 PETER RABBIT (2018) SONY PICTURES FAMILY 5 THOR RAGNAROK WALT DISNEY STUDIOS ACTION 6 STAR WARS EPISODE VIII THE LAST JEDI WALT DISNEY STUDIOS SCI-FI 7 DEADPOOL 2 20TH CENTURY FOX ACTION 8 BLACK PANTHER (2018) WALT DISNEY STUDIOS ACTION 9 JURASSIC WORLD 2 FALLEN KINGDOM UNIVERSAL ADVENTURE 10 MAMMA MIA HERE WE GO AGAIN UNIVERSAL MUSICAL

Gfk Retail Tracking: Top Selling Blu-ray Titles, Full Year 2018, Ranked By Volume

RANK TITLE DISTRIBUTOR GENRE 1 STAR WARS EPISODE VIII THE LAST JEDI WALT DISNEY STUDIOS SCI-FI 2 MARVEL THE AVENGERS INFINITY WAR WALT DISNEY STUDIOS ADVENTURE 3 THOR RAGNAROK WALT DISNEY STUDIOS ACTION 4 DEADPOOL 2 20TH CENTURY FOX ACTION 5 BLACK PANTHER (2018) WALT DISNEY STUDIOS ACTION 6 JUSTICE LEAGUE (2017) ROADSHOW ACTION 7 THE GREATEST SHOWMAN 20TH CENTURY FOX DRAMA 8 BLADE RUNNER 2049 SONY PICTURES SCI-FI 9 SOLO A STAR WARS STORY WALT DISNEY STUDIOS SCI-FI 10 JURASSIC WORLD 2 FALLEN KINGDOM UNIVERSAL ADVENTURE

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ULTRA HD 4K BLU-RAY

One area registering strong growth in 2018 was sales for Ultra HD 4K discs. Just under 500,000 4K discs were sold in 2018 for a value of $14.2 million, a growth of 83% in volume and 81% in value compared to 2017.

Prices for 4K titles was relatively stable, dropping just 1%, versus a decline of 3% for standard Blu-ray titles (compared to 2017). There is a substantial price differential between 4K and standard Blu-ray titles, with 4K titles holding an average price of $29 and standard Blu-ray titles sitting at $21.

GfK Retail Tracking: 4K Share % of Blu-ray Sales

16% 14% 14% 12% 10% 11% 8% 7% 6% 5% 4% 2% 2% 0% 2016 2017 2018

Units Value

The Action, Sci-Fi and Adventure genres all account for large shares of 4K value. Those 3 genres make up a combined 76% of all 4K value but just 48% for standard Blu-ray’s.

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GfK Retail Tracking: Genre Value Share % by Type, 2018

4K 32% 23% 21% 24%

Standard Blu-ray 23% 12% 14% 52%

ACTION SCI-FI ADVENTURE OTHERS

The greater picture quality is also utilised for Documentary titles. 4K has the highest share within the Documentary genre, generating nearly a third of all Blu-ray value. This is mainly due to Roadshow’s BBC documentaries, Blue Planet II and Planet Earth II, both of which have over half their value coming through 4K.

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GfK Retail Tracking: 4K Value Share % of Blu-ray Genres, 2018

DOCUMENTARY 31%

SCI-FI 24%

WAR 21%

ADVENTURE 19%

ACTION 19%

FAMILY 17%

THRILLER 10%

ANIMATED 10%

HORROR 10%

DRAMA 8%

0% 5% 10% 15% 20% 25% 30% 35%

GfK Retail Tracking: Top Selling 4K Blu-Ray Titles, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR GENRE 1 MARVEL THE AVENGERS INFINITY WAR WALT DISNEY STUDIOS ADVENTURE 2 STAR WARS EPISODE VIII THE LAST JEDI WALT DISNEY STUDIOS SCI-FI 3 DEADPOOL 2 20TH CENTURY FOX ACTION 4 THOR RAGNAROK WALT DISNEY STUDIOS ACTION 5 BLACK PANTHER (2018) WALT DISNEY STUDIOS ACTION 6 BLADE RUNNER 2049 SONY PICTURES SCI-FI 7 JUSTICE LEAGUE (2017) ROADSHOW ACTION 8 SOLO A STAR WARS STORY WALT DISNEY STUDIOS SCI-FI 9 READY PLAYER ONE ROADSHOW SCI-FI 10 ANT-MAN AND THE WASP WALT DISNEY STUDIOS ADVENTURE

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RELEASE TYPES

The physical Video Entertainment market is commonly segmented by ‘release types’. The New Release Movies segment, which refers to theatrical movies in their first 3 months of sales, has continued a 10 year trend of increasing value share in the market.

TV Series recorded the biggest decline, down 27% in value and dropping to its lowest share since 2011.

GfK Retail Tracking: Release Type Value % by Year

15% 15% 14% 14% 14% 13% 12% 11% 10% 9% 9% 5% 4% 4% Other TDV 5% 5% 5% 5% 5% 6% 5% 5% 35% 31% Children 29% 30% 31% 30% 32% 33% 36% 36% 37% TV Series 28% 31% 40% 37% 33% 32% 30% 30% 28% 29% 26% Catalogue Movies New Release Movies 22% 24% 25% 11% 13% 16% 18% 19% 17% 19% 19%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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GfK Retail Tracking: Release Type Value by Year

$400 -13% -10% -26% -27% -16% $350 Millions $300

$250 $221 $200 $178 $152 $160 $163 2017 $150 $132 2018

$100 $56 $47 $50 $26 $19 $0 New Release Catalogue TV Children Other Direct Movies Movies Series To Video

NEW RELEASE MOVIES

New Release movies, which are new theatrical movies within their first 13 weeks of sales, was one of the better performing release types in 2018, increasing to take its highest ever share of the market.

One of the indicators for the value size of a New Release movie is its box office performance. Box office takings for discs released in 2018 increased by 1%, with some box office blockbusters such as Disney’s Avengers: Infinity War and Star Wars Episode VIII The Last Jedi both generating over $50M at the box office. 5 of the discs released in 2018 had a box office over $40M, while there were only 2 in 2017.

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GfK Retail Tracking: Box Office by Release Year (Billions)

$1,264

$1,143 $1,149 $1,163 $1,085 $1,061 $1,070

2012 2013 2014 2015 2016 2017 2018

Consumer research via the GfK ConsumerScope study shows that having seen a movie previously is the leading purchase driver for DVD and Blu-rays, and is particularly important as a driver for New Release movie sales.

New Release discs have maintained their price in recent years. New Release DVD’s had an average price of $20.30 in 2018, matching the price from 2017. New Release Blu-ray prices actually increased, impacted by the larger share of 4K titles which come with a higher average selling price.

GfK Retail Tracking: New Release Avg Format Price by Year

$35 $29.6 $28.9 $28.5 $29.2 $30 $27.6 $27.6

$25 Blu-ray $21.8 $20.8 $19.9 $20.0 $20.3 $20.3 DVD $20

$15 2013 2014 2015 2016 2017 2018

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CATALOGUE MOVIES

Catalogue Movies was the top performing release type sector in 2018, taking its highest share in the market since 2011.

One contributing factor to the better performance of Catalogue Movies was bundles. Bundles are when 2 or more individual items are shipped together in the same SKU, for example Mamma Mia! two movie collection.

Bundles have increased in share within Catalogue Movies and with their average price being more than double non-bundle titles ($23.50 compared to $11.50), it has helped limit the decline in Catalogue Movies.

GfK Retail Tracking: Bundle Share % of Catalogue Movies

20.0% 18.7% 15.6% 15.0% 15.1% 14.3%

10.0% 10.3% 8.1% 7.7% 8.3% 5.0%

0.0% 2015 2016 2017 2018

Units Value

64 AHEDA 2018 YEARBOOK VIDEO ENTERTAINMENT AUSTRALIA: PHYSICAL RETAIL MARKET

From the GfK ConsumerScope data, the top reason people choose to purchase discs rather than a digital title is because they like to have a collection. Bundles fit will within this, often coming with special packaging or additional features.

Another driver of Catalogue movie sales is drafting. Drafting refers to the uplift in disc sales for older franchise movies when a new movie in that franchise is released at the cinema. An example of this in 2018 was Deadpool, which saw a lift in disc sales when Deadpool 2 was released at the cinema.

GfK Retail Tracking: Deadpool Monthly Volume

25,000

20,000 Deadpool 2 15,000 Cinema Launch

10,000

5,000

0 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

In 2018, 5% of all Catalogue movie sales were for titles experiencing that drafting lift, down from 6% in 2017. This could potentially be an impact of a slightly reduced number of box office blockbuters; there were 17 titles that had a box office of $20M or more in 2017 but only 13 in 2018.

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GfK Retail Tracking: Drafting % of Catalogue Movies

8.5% 7.1% 5.8% 6.0% 6.0% 4.7% 5.1% 3.7% Units % Value %

2015 2016 2017 2018

The top drafting licenses in 2018, when divided by the number of titles in the license, were 20th Century Fox’s Deadpool and Disney’s Incredibles. Both of those licenses recorded an average of an additional 1700 units or more, per week, during that drafting period.

GfK Retail Tracking: Top 5 Selling Drafting Licenses, 2018, Ranked By Volume

RANK TITLE AVG. WEEKLY LIFT IN UNITS PER TITLE IN LICENSE 1 DEADPOOL 1,855 2 DISNEY INCREDIBLES 1,747 3 MAMMA MIA 1,186 4 NEW AVENGERS 822 5 WRECK IT RALPH 776

TV SERIES

TV Series is the equal largest release type sector in 2018, though it also recorded one of the largest declines of any of the release types, down 26% in value.

The biggest license is, once again, Roadshow’s HBO license Game of Thrones. Despite not releasing a new title in 2018, Game of Thrones still generated double the next biggest TV license. There was a decline in value versus 2017, with 54% less value generated through that license in 2018.

Sony Pictures Outlander was the next top selling license, moving up from being the seventh biggest license in 2017 to the number two spot in 2018. Sales for that license grew by 65%.

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GfK Retail Tracking: Top 10 Selling Licenses, TV Series, 2018, Ranked By Volume

LICENSE DISTRIBUTOR GAME OF THRONES ROADSHOW OUTLANDER TV SERIES SONY PICTURES WALKING DEAD 20TH CENTURY FOX VIKING TV SERIES 20TH CENTURY FOX A PLACE TO CALL HOME UNIVERSAL BIG BANG THEORY ROADSHOW THE CROWN (2016) SONY PICTURES DR WHO ROADSHOW SUPERNATURAL ROADSHOW GREYS ANATOMY WALT DISNEY STUDIOS

GfK Retail Tracking: Top 10 Selling Titles, TV Series, Full Year 2018, Ranked By Volume

RANK TITLE DISTRIBUTOR GENRE 1 GAME OF THRONES SEASON 7 ROADSHOW DRAMA 2 OUTLANDER SEASON 3 SONY PICTURES DRAMA 3 A PLACE TO CALL HOME SEASON 5 UNIVERSAL DRAMA 4 THE CROWN SEASON 1 SONY PICTURES DRAMA 5 BIG LITTLE LIES SEASON 1 ROADSHOW DRAMA 6 VIKINGS SEASON 5 PART 1 20TH CENTURY FOX DRAMA 7 THE HANDMAIDS TALE SEASON 1 20TH CENTURY FOX DRAMA 8 GAME OF THRONES SEASON 6 ROADSHOW DRAMA 9 WESTWORLD SEASON 1 THE MAZE ROADSHOW SCI-FI 10 BIG BANG THEORY SEASON 11 ROADSHOW COMEDY

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New Release TV (the first 13 weeks of a TV titles sales) was where the biggest decline in TV series came from. New Release dropped by 33% compared to 2017, while the rest of the TV category declined by 23%. Game of Thrones had accounted for 12% of New Release TV in 2017, but fell to just 4% in 2018.

With those changes, New Release TV made up just 29% of total TV Series value, a far cry from the 36% it accounted for in 2016. Older TV titles that have been out for 2 years or more have taken a progressively larger share each year.

GfK Retail Tracking: TV Series Value % by Release Period

30% 32% 33%

Deep TV (105+) 13% 13% 14% Back Catalogue TV (53-104) 21% 23% 24% Recent TV (14-52)

36% 32% 29% New Release TV (0-13)

2016 2017 2018

ABOUT GfK

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To find out more, visitwww.gfk.com/en-au/ or follow GfK on Twitter: twitter.com/gfk?lang=en

68 AHEDA 2018 YEARBOOK “The physical disc retail market generated more than $500 million in 2018 with nearly 3 million discs sold.”

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The data for this chapter is taken primarily from the GfK ConsumerScope survey, an online syndicated survey into video entertainment. The survey is conducted continuously throughout the year amongst approximately 3,000 Australians aged 14 to 65 years per quarter.

HOME ENTERTAINMENT CONSUMPTION TRENDS

Australians’ love for Home Entertainment1 continued in 2018. Australians 14 to 65 years of age have watched an average of 10 titles every month across a wide range of formats, including discs, digital, catch-up TV and cinema. An average of 17.8 hours are spent weekly watching content on these platforms and services.

In contrast, piracy consumption in Australia has reduced significantly to a historic low. Compared to 2014, when almost 1 in 3 Australians had watched pirated content (direct or indirect2), only 13% of Australians in 2018 claimed they have watched pirated content in the past month. The hours spent and number of pirated titles watched in 2018 are at a historic low, as on average only 2.1 pirated titles3 were watched monthly, and 0.6 weekly hours spent. The decline in piracy consumption is primarily driven by strengthened legal deterrents (e.g. site blocking legislations), shorter release windows from theatrical to disc / EST4 / VOD5 releases, and more importantly, the continuing fragmentation of the Home Entertainment market, which is providing Australian consumers more content and easier access than ever to watch, and an ever greater diversity of physical and digital platforms to choose from.

As the diversity of offerings continues to flourish for Home Entertainment in Australia, notable shifts in consumer viewing behaviour have been observed over recent years. Digital consumption, for instance, has continued to rise over the last few years. Altogether, paid digital formats (EST, VOD, SVOD6) now surpass discs as Australia’s most popular form of Home Entertainment. In 2018, one in ten (12%) Australians have watched EST titles in the past month, a significant increase from three years ago. Meanwhile, 21% of VOD viewers watch at least 4 VOD titles every month. Nevertheless, discs remain one of Australians’ favourite formats, with 38% of Australians having watched Home Entertainment content on DVD or Blu-ray disc in the past month in 2018. Blu-ray discs in particular, have continued to appeal to Australian Home Entertainment consumers for the premium viewing experience it offers.

1 The GfK ConsumerScope defines involvement in Home Entertainment as those who have watched video content (e.g. Movies, TV series) on disc, pay TV, free-to-air TV, cinema, streaming video-on-demand services, free online video platforms (e.g. YouTube), purchase-downloaded a digital title to keep, rented a digital title, directly pirated or copied a title to watch in the last month (excl. those who watched pay TV or free-to-air TV only in the last month). 2 GfK ConsumerScope defines direct piracy as ‘pirated titles from the internet (downloaded or streamed)’, and indirect piracy as ‘shared pirated content’/ ‘pirated titles copied from someone else (e.g. via USB, hard-drive, etc.)’ 3 This includes both direct and indirect piracy. 4 EST = electronic sell through/ digital purchase to keep 5 VOD = paid video-on-demand/ digital rental 6 SVOD = subscription video-on-demand

AHEDA 2018 YEARBOOK 71 CONSUMER BEHAVIOUR

GfK ConsumerScope: Last month consumption over time (%)

100 90 86 Free-to-Air TV 80 75 70 60 Paid digital (VOD, 57 EST, SVOD) 50 48 40 31 38 DVD/Blu-ray disc 30 20 19 13 10 Piracy 0 2014 2015 2016 2017 2018 n=25632 n=13047 n=12702 n=13256 n=12110 % Viewership in the past month

Base: National representative sample of Australian population (aged 14-65)

MOBILE CONSUMPTION

TV screens remain Australians’ primary device for viewing Home Entertainment content, with over half of content watched through the TV screen in 2018. Meanwhile, Australians are watching Home Entertainment content on more screens than ever before, as share of PC and mobile screens continues to grow. Particularly, the share of mobile phone viewing has almost doubled over the last three years – 14% of content viewing was conducted on a phone in 2018, up from 8% in 2015.

ConsumerScope: Device share – of total hours watched (%)

100% 7 9 9 8 90% 8 9 12 14 Tablet 80%

70% 24 22 25 26 60% Mobile Phone 50%

40% PC 30% 61 60 55 52 20%

10% TV

% Share of total Home Entertainment watched 2015 2016 2017 2018 n=13047 n=12702 n=13256 n=112110

Base: National representative sample of Australian population (aged 14-65)

72 AHEDA 2018 YEARBOOK CONSUMER BEHAVIOUR

The younger age groups have significantly higher likelihood to watch Home Entertainment content on portable devices – for those under 35 years old, they have a larger repertoire of screens used to watch Home Entertainment, compared to those more mature in age.

ConsumerScope: Device share of viewing hours (%) by age groups (2018)

TV 40 PC Mobile Phone 28 Tablet 25 16 7 7 4

14-17 y.o. 18-24 y.o. 25-34 y.o. 35-44 y.o. 45-54 y.o. 55-65 y.o.

Base: National representative sample of Australian population (aged 14-65) 2018 (n=12110)

Free-to-air TV still dominates the TV screen, but paid physical and digital content is increasingly making an entry into this domain. In 2018, SVOD is the second most popular format watched on the TV screen (41%), followed by discs (36%) and Catch-up TV (30%).

In contrast, content watched on the PC and portable devices is predominantly online. Free online videos (e.g. content on YouTube) claim the biggest share across PC and the portable screens in 2018, but SVOD providers now also claim a notable presence on these screens.

AHEDA 2018 YEARBOOK 73 CONSUMER BEHAVIOUR

ConsumerScope: Formats watched in the past month on device (2018)

TV PC Tablet Mobile Phone

Discs 36% 6% 2% 2%

Free-to-Air TV 75% 0% 0% 0%

Catch-up TV 30% 17% 9% 6%

SVOD 41% 16% 10% 9%

VOD 6% 2% 2% 2%

EST 6% 4% 3% 3%

Piracy 7% 7% 2% 1% Free online videos 28% (YouTube) 58% 30% 50%

Base: Total involved in Home Entertainment, 2018 (n=8,116)

Portable on-the-go consumption of Home Entertainment content is also on the rise, likely to be driven by the increase in smart devices, relaxed mobile data caps, increased public Wi-Fi areas, and the growing quantity and diversity of legitimate content now available for consumers to download and watch. As of 2018, Australians spent an average of 6.1 hours per week watching video content on portable devices (mobile phone and tablet), almost as high as number of hours spent on TV (8.8 hours). 1 in 4 of Australians now claims to have watched more content on-the-go compared to a year ago.

Notably, while limited mobile data allowances has been a key barrier to on-the-go viewing of Home Entertainment in the past, this is weakening as Australians now have greater data allowances than before. As of 2018, 37% of Australians aged 14-65 had monthly data allowances of 5GB or above – a steady and significant growth from 30% in 2017 and 19% in 2016. In the same token, 32% of Australians aged 14-65 stated that they would watch more content on the go if they had more data available, a decrease from 37% in 2017.

Furthermore, awareness of the SVOD download function onto mobile devices is now up to half the population, and Australians are utilising this function to facilitate on-the-go viewing occasions. Amongst those who have downloaded Netflix titles to watch in 2018, the top three occasions for downloading were holidays (53%), on-flight travel (46%) and commuting (41%), while 31% of the occasions were for watching from home.

As of 2018, most of the Australian telcos now offer data-free video streaming for selected content providers. Combined with the wide and increasing availability of free public Wi-Fi hotspots, more data allowance, and the increase in large-screen options for smart devices, these factors are likely to have, and continue to influence, the rise of on-the-go Home Entertainment consumption in Australia.

74 AHEDA 2018 YEARBOOK CONSUMER BEHAVIOUR

PAID DIGITAL (EST, VOD, SVOD)

Paid digital consumption has seen consistent growth over the last few years. In 2018, almost half of the Australian population aged 14-65 has watched paid digital content in the past month. SVOD has been the key driver behind the continuous growth in paid digital, though the growth of past-month SVOD viewing in 2018 has slowed slightly. Meanwhile, EST has seen a significant increase in past-month consumption from 8% in 2015 to 12% in 2018, while VOD remained relatively stable at 8%.

GfK ConsumerScope: Last month consumption over time (%)

Total paid digital 50 48 43 40 SVOD

30 26 EST 20 18 12

10 10 8 VOD 8

% Viewership in the past month 0 2015 2016 2017 2018 n=13047 n=12702 n=13256 n=112110

Base: National representative sample of Australian population (aged 14-65)

Furthermore, across paid digital formats, over 2 in 5 Australian paid digital consumers in 2018 are heavy viewers, who have watched paid digital content at least every fortnight.

18% 17% 21% OCCASIONAL (YEARLY OR EVERY 6 MONTHS 9% 10% 10% LIGHT (AT LEAST 15% [VALUE] 15% BIMONTHLY)

MEDIUM (AT LEAST MONTHLY) 43% 44% 41%

Frequency of digital viewership by format HEAVY (AT LEAST FORTNIGHTLY)

EST VOD SVOD

Base: National representative sample of Australian population (aged 14-65)

AHEDA 2018 YEARBOOK 75 CONSUMER BEHAVIOUR

The younger age groups are the most active in consuming digital Home Entertainment content. In 2018, nearly two in three of those under 35 years old have watched paid digital content in the past month, compared to 38% of those 35 years old or above.

GfK ConsumerScope: Paid digital consumption by age (2018

Total paid digital viewing in 2018

48 26

14-17 y.o. 18-24 y.o. 25-34 y.o. 35-44 y.o. 45-54 y.o. 55-65 y.o.

Total (NET) (NET) 14-17 18-24 25-34 35-44 45-54 55-65 population <35 y.o. 35+ y.o y.o y.o y.o y.o y.o y.o SVOD 43% 55% 34% 43% 59% 57% 12% 35% 24% EST 12% 20% 6% 13% 19% 22% 11% 6% 2% VOD 8% 13% 5% 9% 12% 15% 8% 5% 2% n=12110 n=3276 n=8834 n=186 n=891 n=2199 n=2579 n=2901 n=3354

Base: National representative sample of Australian population (aged 14-65), 2018

76 AHEDA 2018 YEARBOOK CONSUMER BEHAVIOUR

The growth in paid digital consumption is encouraged by Australians’ increasing familiarity with digital formats, the rise of smart device ownership and usage, the growing number and range of digital providers, and the sheer increase of digital content being available in the market today.

Faster download time, less buffering, earlier release window and rewards points/ schemes remain the top motivators for digital viewing across EST, VOD and SVOD. Also, compared to the year before, slightly more digital viewers now also consider ‘easier to access titles on TV’ and ‘availability of bonus content’ as important factors that would encourage greater EST consumption.

GfK ConsumerScope: Paid digital consumption by age (2018

37% 32% 39% Fast download time 31% 32% 24% 33% 31% Less buering 31% 29% 29% 25% 35% 38% 36% Earlier release 29% 30% 29% 31% 28% 29% Reward points / schemes 28% 25% 25% 25% 24% Easier to access in general 28% 22% 22% 19% 25% Easier to access titles on TV 24% 23% 26% 26% 19% 30% Better picture / sound quality 26% 23% 24% 24% 18% Able to stream, purchase and rent 18% 19% 19% on the same platform 16% 18% 15% 20% Availability of bonus content 20% 14% 22% 17% 12%

2017 2018

Base: Involved in Home Entertainment YE Q4 2017 (n=4094), YE Q4 2018 (n=2024). Note that the attribute “cheaper price” is excluded as it is typically the most commonly selected attribute in barrier-related questions, and hence not differentiating.

AHEDA 2018 YEARBOOK 77 CONSUMER BEHAVIOUR

SUBSCRIPTION VIDEO ON DEMAND (SVOD)

Of all formats, subscription video on demand has shown the greatest increase in consumption. Since Netflix launched in Australia in March 2014, penetration of SVOD has increased from 5% in 2014 to 43% in 2018 (+720%).

GfK ConsumerScope: SVOD consumption by year (%)

45 43 40 39 35

30 29 25 20 18 15 10 5 5 0 % Viewership in the past month 2014 2015 2016 2017 2018 n=25632 n=13047 n=12702 n=13256 n=12110

Base: National representative sample of Australian population (aged 14-65)

Since then, many other international and home-grown SVOD services have become available in Australia, such as Stan, Foxtel Now and Amazon Prime Video, in addition to an increasing number of niche providers (e.g. AnimeLab, DocPlay, Garage, Hayu reality TV, CBS All Access, Horror by AMC Networks, Sundance Now independent cinema, Curiosity Stream documentaries etc.).

While Netflix still accounts for the majority of viewers, other SVOD providers have been gaining share over the last couple of years, and all are competing fiercely for a share of viewing. And yet, entry of more services in Australia is still expected. Whilst Disney announced a new content deal with Australian SVOD platform Stan late in 2018, which enables Stan subscribers to access major Disney movies, Disney’s own direct-to-consumer on-demand platform is on the horizon and expected to enter the market in 2019.

The fragmentation of the on-demand landscape is likely to continue as more ‘non-traditional’ providers enter the market. In 2018, Facebook rolled out its Facebook Watch service here in Australia and around the world. Likewise, Instagram unveiled its app-based, vertical-screen, IGTV service in USA the same year, showing its newly directed interest in longer video content and ambition to lure young- generation viewers.

78 AHEDA 2018 YEARBOOK CONSUMER BEHAVIOUR

GfK ConsumerScope: SVOD service subscription (%)

50% 45% 43% 44% 40% 35% 30% 25% 20% 14% 15% 12% 10% 5% 10% 9%

% of subscribers 5% 6% 7% 3% 0% (n=2932) (n=3182) (n=3010) (n=2986) Jul-Sep 18 Jan-Mar 18 Apr-Jun 18 Oct-Dec 18

Base: National representative sample of Australian population (aged 14-65) as shown. ‘Subscribers’ incl. those currently subscribe to the service and those currently on free trial.

GfK ConsumerScope: Top 5 reasons to sign up to SVOD service (2018)

Aordable 20% To watch at a time that suits 16% To watch multiple episodes in a row 13% Free trial 12% To access a catalogue of new TV programs 12% To watch original services produced by provider 11% To access back catalogue of TV programs 9% To watch a speciﬁc program 9% To access a catalogue of new movie releases 9% To watch on multiple devices 8%

Base: Watched SVOD in the past month: 2018 (n=8116)

AHEDA 2018 YEARBOOK 79 CONSUMER BEHAVIOUR

Affordability remains the top reason that draws Australian consumers to SVOD services. Meanwhile, original content is an important differentiator for consumers to choose content provider(s).

It is also becoming more common to have multiple subscriptions. Consumers want choice and access to significant breath of original content, and since the various subscription services are relatively affordable, more consumers have multiple subscriptions. In 2018, one in three Australian consumers were paying for two or more pay TV or SVOD services, this is up from 31% in 2017.

Overall, SVOD has been a huge success so far in Australia. The growing popularity of SVOD has contributed to the reduction in piracy, while bringing disruption to disc and linear TV consumption. In part due to SVOD growth, Australians have become increasingly familiar with, and open to, paid digital consumption.

EST AND VOD

Over the last few years, there has been an increase in transactional sales of EST and VOD7. While past- month incidence of EST has increased during this period, VOD consumption however has remained stable, indicating that VOD is being consumed more heavily amongst the same proportion of people. Amongst past-month VOD viewers in 2018, 1 in 5 (21%) are heavy VOD users, who are watching four or more VOD titles every month. Notably, compared to SVOD, EST and VOD consumption is much more likely to be occasional.

GfK ConsumerScope: Consumption frequency segmentation, 2018

100%

90% Never 80% 45% 70% 1-3 times per year 63% 67% 60% 4% 50% 3% 4-6 times per year 3% 40% Every month 30% 12% 13% % Viewing frequency 20% 45% 7% 5% 6% At least fornightly 10% 4% 13% 10% 0% SVOD VOD EST

Base: National representative sample of Australian population (aged 14-65) 2018 (n=12110)

The convenience of watching content anywhere and at anytime, immediate delivery, and an easy process, remain the key drivers for choosing EST or VOD over physical and other digital formats. Meanwhile, for EST in particular, 2018 has seen an increase in the percentage of EST consumers (15%) citing “to share with friends and family” as one of their reasons of choosing EST over other formats, in comparison to 2017 (12%).

7 Based on historical trends in GfK POS tracking data

80 AHEDA 2018 YEARBOOK CONSUMER BEHAVIOUR

GfK ConsumerScope: Drivers of EST & VOD, 2018

EST VOD

Immediate ‘delivery’ 20% Easy process 29%

You can watch it Only wanted to 19% 28% anywhere and anytime watch it once

Convenience of watching it 19% Immediate ‘delivery’ 27% when I wanted to

Convenience of watching it Easy process 25% 19% when I wanted to

Convenience of not having It was cheaper 17% 25% to leave the house

Base: 2018 past-month user of format EST (n=787), VOD (n=550)

Compared to SVOD occasions, EST and VOD have a higher likelihood of being consumed socially.

GfK ConsumerScope: Viewing occasion

EST VOD SVOD

Spontaneous night-in with friends/family 21% 26% 16%

Spontaneous night-in alone 20% 18% 20%

Planned night-in with friends/family 20% 23% 16%

Planned night-in alone 20% 15% 19%

Watching out-of-home (travelling, holiday) 8% 3% 4%

Movie/TV during the day 10% 15% 20%

Other occasions 2 1% 5%

Base: Past-month user of format in Q1’18 EST (n=204), VOD (n=158), SVOD (n=1194). NB Q1’18 is the most recent quarter when viewing occasion is asked in the ConsumerScope survey.

AHEDA 2018 YEARBOOK 81 CONSUMER BEHAVIOUR

PIRACY

In 2018, piracy in Australia reached its lowest level in eight years. Both direct and indirect piracy have experienced steep declines, with a respective 60% and 55% drop in 2018 (vs. 2015).

GfK ConsumerScope: Last month consumption over time (%)

35%

30% 31% Total Piracy 25% 24% 20%

15% 15% Direct Piracy 13% 10% 11% 6% 5% Indirect Piracy

% Viewership in the past month 0% 2014 2015 2016 2017 2018 n=25632 n=13047 n=12702 n=13256 n=12110

Base: National representative sample of Australian population (aged 14-65) 2018 (n=12110)

A number of factors have contributed to the reduction of piracy in Australia over the last five years:

• Legal deterrents: the Australian Home Entertainment industry has continued its legal battle against piracy. By the end of 2018, access to 758 piracy domains is blocked for subscribers of major Australian ISPs. A fifth site blocking case targeting a further 99 domains on 79 online locations, filed by Village Roadshow, Madman and the six major Hollywood Studios, is expected to be heard in the first half of 2019.

• Affordability: the increased availability of paid digital content on EST, VOD and SVOD formats are providing Australians with more affordable, convenient and legitimate alternatives at their fingertips. Particularly, the introduction of SVOD in the Australian market in 2014 has since encouraged consumers to switch away from piracy, offering a safer, faster and better quality viewing experience.

• Choice and range: there is an increasing quantity and diversity of quality content available in the Australian market, from a wide range of content providers and across various formats.

• Global alignment of release windows: increasingly, the global alignment of release windows has significantly shortened the waiting period for Australian audiences, such that some major international TV shows and blockbusters have now become available in Australia at the same time as in the US.

82 AHEDA 2018 YEARBOOK CONSUMER BEHAVIOUR

GfK ConsumerScope: Last month consumption over time – SVOD & Piracy

TOTAL PIRACY SVOD

43% 44% 42% 41% 42% 39% Proposed ‘three strikes’ 38% legislation (Copyright Notice 37% Scheme Code 2015) 31% 30% Netﬂix enteredJD8$ 34% 34% Australia 27% 31% Australian Federal Court 30% 23% orders blocking of 59 piracy 22% sites by Australian ISPs 19% 21% 21% 20% 21% 21% 19% 20% 19% 19% 16% 8% 15% 14% 14% 8% 8% Aus. Federal court has ordered 13% 6% Dallas Buyers Club letters & Site 12% blocking (Copyright online internet companies to block 5 infringement) Bill 2015 copyright-infringing websites

Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18

Base: National representative sample of Australian population (aged 14-65) 2018 (n=12110)

CATCH-UP TV (BVOD)

Consumption of catch-up TV has been fairly stable over the last few years, with over a third of Australians having watched catch-up TV in the past month in 2018. However, those who watch catch- up TV are watching it more, with 41% claiming an increase in time spent compared to a year ago.

AHEDA 2018 YEARBOOK 83 CONSUMER BEHAVIOUR

GfK ConsumerScope: Catch-up TV consumption over time

50%

45%

40%

35% 35% 35% 33% 34% 30% 31%

25% Catch-up TV 20%

15%

10%

5% % Viewership in the past month 0% 2014 2015 2016 2017 2018 n=25632 n=13047 n=12702 n=13256 n=12110

Base: National representative sample of Australian population (aged 14-65) as shown

“Can acquire easily” remains the most-associated quality with catch-up TV amongst Australian Home Entertainment viewers. At the same time, perceptions of catch-up TV having excellent sound and picture quality have been improving steadily over the last three years.

50%

45%

40% 38% Innovative formats 36% 35% 33% Excellent picture quality 30% 30% 28% Excellent sound quality 26% 28% 25% 26% Formats I prefer 24% 25% 20% 18% I can watch anywhere/anytime 18% 19% 17% Value for money 15% I can acquire easily 10%

% Format associations with CUTV 5%

0% 2015 2016 2017 2018 n=8224 n=8167 n=8168 n=8116

Base: Australians involved in Home Entertainment as shown.

Compared to free-to-Air TV and pay TV, catch-up TV has demonstrated its ability to engage a slightly younger, and more female demographic.

84 AHEDA 2018 YEARBOOK CONSUMER BEHAVIOUR

GfK ConsumerScope: Gender x Age by linear consumption (2018)

Base: National representative sample of Australian population (aged 14-65)

DISC PURCHASE AND CONSUMPTION

The Australian disc market is very resilient, with per capita purchase rates in Australia much higher than other countries. However, in line with the global decline of physical media, sales volumes of discs in Australia has dropped over the last few years. The number of people buying discs has also seen relative decline in recent years, but at a much slower pace.

AHEDA 2018 YEARBOOK 85 CONSUMER BEHAVIOUR

GfK POS tracking & ConsumerScope Acquisition incidence & sales volume

60% 60 55% 54 51 50 % Disc buyer

50% Millions 40 40 penetration** 45% 35 40% 29 30 35% 33% 20 30% 30% 31% 28% 10 Unit Sales* 25% 25% 20% 0 2014 2015 2016 2017 2014 n=25632 n=13047 n=12702 n=13256 n=12110

*Souce: GfK POS tracking **Source: GfK ConsumerScope (Nat rep sample as shown)

Several factors serve as important pillars to the disc market in Australia:

• Strong format perceptions: both DVD and Blu-ray discs are still strongly associated with great sound and picture quality, in addition to ease of acquisition, and being a preferred format.

GfK ConsumerScope: Format associations 2018

DVD Blu-ray SVOD EST VOD

Excellent picture quality 33% 46% 35% 20% 18% Excellent sound quality 34% 44% 35% 19% 18% Value for money 19% 12% 36% 9% 9% Watch anytime/anywhere 10% 7% 37% 17% 15% I can acquire easily 31% 23% 40% 19% 18% Formats I prefer 24% 18% 35% 9% 9% Innovative formats 9% 13% 33% 10% 14% Recent content 16% 15% 38% 14% 18%

Base: those involved in Home Entertainment 2018 (n=8116)

86 AHEDA 2018 YEARBOOK CONSUMER BEHAVIOUR

• Desire for collection / tangibility: while ease of access and on-demand characteristics remain amongst the main attraction of paid digital formats, disc still distinguishes itself for its collectability. By 2018, a great diversity and range of paid digital content has become widely available for Australian audiences. Internet and technological infrastructures have significantly improved to facilitate digital viewing; and the Australian market in general has become more familiar with digital consumption than ever before. As a result, general digital barriers, such as limited storage space or download/ upload limit, have decreased as a driver to stimulate disc growth. However, people are still choosing discs over other digital formats, ultimately because they like to own a collection for themselves. The collectability of discs and the tangible experience it offers is still being highly treasured by Australian Home Entertainment audience.

GfK ConsumerScope: Reasons for choosing discs (2018)

DVD Blu-ray SVOD EST VOD

Base: Disc buyers in 2018 (n=1644)

Pricing and promotion: Compared to three years ago, when less than half (42%) of discs were purchased at full price, 53% of discs were full-price purchases by the end of 2018. However, it is still important that disc buyers feel they get a good deal. Of those who purchased discs on special offer, 65% claimed that they would not have purchased the title if there was not a special offer available. The most appealing special offer for discs was “2 for 1”. The psychology of getting more for the same price (perceived value) may be the driver for this, also potentially tying in with a collecting mindset.

Digital perceptions: attitudes towards discs vs. digital has never been a clear-cut matter in Australia. The data shows that, on the one hand, a majority of almost seven in ten Australian Home Entertainment viewers agree that digital is the way of the future. On the other hand, however, about half also agree that they still do prefer more traditional ways of viewing. As of 2018, openness to a digital future, aspiration to keep pace with new technology and embracing digital’s convenience versus the consumer’s personal attachment to traditional formats still co-exist in the market.

AHEDA 2018 YEARBOOK 87 CONSUMER BEHAVIOUR

GfK ConsumerScope: Digital Perceptions (2018 vs. 2017)

70% Digital is the way of the future 65%

I prefer more traditional ways of 47% watching home entertainment 50% 2017 51% 2018 I ﬁnd it easy to access content digitally 47%

48% I like to keep up to date with new technology 44%

Base: Those involved in Home Entertainment YE Q4 2018 (n=2028), YE Q4 2017 (n=8168). Note that apart from 2017, this question is asked only every Q1/Q2 of the year.

Blu-ray consumption and acquisition is holding steady, indicating that consumers are appreciating the superior sound and vision quality of Blu-ray over standard disc. However, DVD is still the more popular disc format.

GfK ConsumerScope: Consumption and acquisition share – DVD vs. Blu-ray

60%

53% 50% 46% DVD consumption 40% 41% 36% 29% DVD acquisition 26% 27% 32% 30% 24% 22% 22% Blu-ray consumption 20% 21% 19% 18% 18% 16% 16% 16% 10% 14% 15% Blu-ray acquisition Disc consumption & acquisition 0% 2014 2015 2016 2017 2018 n=25632 n=13047 n=12702 n=13256 n=12110

88 AHEDA 2018 YEARBOOK CONSUMER BEHAVIOUR

Discs have a spread of consumers across different consumption frequencies, likely as a result of physical’s heritage in the market, while SVOD, as a more recent format, is more polarising, with equally high proportions of fortnightly and ‘never’ consumers. This demonstrates that there is a large proportion of Home Entertainment viewers who are still not yet on board with the platform.

GfK ConsumerScope: Consumption frequency segmentation

100%

90% Never 35% 38% 80% 8% 70% 63% 67% 1-3 times a year 60% 8% 75% 7% 4% 16% 50% 3% 4-6 times a year 7% 3% 40% 12%

30% 8% 12% Every month 13% 20% 44% 34% 7% 7% 4% 5% 6% Frequency of viewing HE formats 26% At least fornightly 10% 3% 4% 12% 13% 10% 0% Catch-up SVOD Discs Pirated VOD EST TV titles

DISC RENTAL

Disc rental has been stable in recent years, with 15% of Australians having rented in the past month. 73% of past-month disc renters in 2018 said they have spent the same, if not more, time watching titles on rented disc compared to a year ago. The recent rise of SVOD and the overall paid digital sector, increased smart device ownership amongst Australians, and the market’s growing adoption of viewing on-the-go have however all contributed to the overall decline of disc rental in Australia.

AHEDA 2018 YEARBOOK 89 GfK ConsumerScope: Acquisition incidence of disc rental over time

25%

21% 20% 18% 16% 15% 15% 15%

10%

5% % Acquisition incidence

0% 2014 2015 2016 2017 2018 n=25632 n=13047 n=12702 n=13256 n=12110

Base: National representative sample of Australian population (aged 14-65)

Notably, disc rental has been similarly disrupted as piracy by the arrival of SVOD in Australia. In 2018, 68% of Australians who have watched SVOD in the past month said that compared to a year ago, they have rented less DVD or Blu-ray discs, or had not even done it for over a year – a similar ratio to the reduction of piracy consumption.

GfK ConsumerScope: Consumption frequency segmentation

100%

90% Never 35% 38% 80% 8% 70% 63% 67% 1-3 times a year 60% 8% 75% 7% 4% 16% 50% 3% 4-6 times a year 7% 3% 40% 12%

30% 8% 12% Every month 13% 20% 44% 34% 7% 7% 4% 5% 6% Frequency of viewing HE formats 26% At least fornightly 10% 3% 4% 12% 13% 10% 0% Catch-up SVOD Discs Pirated VOD EST TV titles

Base: Total SVOD viewers YE Q4 2018 (n=4938)

Faced with the many new and growing challenges in the Australian market, the disc rental sector has been evolving in recent years. While the last few years have seen large-scale closure of disc rental stores across Australia, the sector is transforming itself from a primarily bricks-and-mortar, store-based model to more diverse, cost-efficient hence sustainable models – for example video kiosks in shopping malls. As of 2018, there are 1,200 video kiosks in Australia.

90 AHEDA 2018 YEARBOOK “Blu-ray consumption and acquisition is holding steady, indicating that consumers appreciate its superior sound and vision quality.”

AHEDA 2018 YEARBOOK 91 + Blu-ra VD y c D o 0 m 2 b i p n o e

T d

0 2 e R 7 m a lu nked by Vo

D + DV Blu- 20 ra p y o c T o m 8

1 b

e d

R a 8 n ke e d by Volum

92 AHEDA 2018 YEARBOOK DEVICES AND EMERGING VIEWING PATTERNS

People spent nearly 18 hours a week watching Video Entertainment content1 in 2018, one of the highest figures on record. There are a myriad of devices used to watch this content, from a big screen TV, to laptops and mobile devices like smartphones.

The TV is the preferred option for consumers, with 49% of content watched via the TV in Q4-18. This has dropped in shares, as mobile devices, especially smartphones, take a greater share of viewing time.

GfK ConsumerScope: Content Viewing Device, Q4 2017 vs. Q4 2018

Q4 2016 Q4 2017 Q4 2018 61% 54% 49%

28% 23% 25% 16% 12% 10% 7% 8% 7%

Laptops are also increasing in share, accounting for 28% of viewing time in Q4-18, a record for that device, despite piracy hitting historical lows in 2018. Tablets have dropped slightly in share in Q4-18 as sales for those devices slowed compared to prior years.

1 GfK ConsumerScope – includes video content (e.g. Movies, TV series) on disc, pay TV, free-to-air TV, cinema, streaming video-on-demand services, free online video platforms (e.g. YouTube), purchased download a digital title to keep, rented a digital title, directly pirated or copied a title to watch in the last month (excl. those who watched pay TV or free-to-air TV only in the last month).

AHEDA 2018 YEARBOOK 93 DEVICES AND EMERGING VIEWING PATTERNS

GfK Consumerscope: Content Viewing Device

60% 61% 54% 53% 51% 49%

TV PC 27% 28% 25% Mobile Phone 22% 23% 23% 14% 16% Tablet 9% 10% 13% 12% 10% 9% 8% 7% 8% 7%

Q2-16 Q4-16 Q2-17 Q4-17 Q2-18 Q4-18

Which device a consumer uses often depends on what content they are watching. The TV is used across all the different formats listed below, whilst mobile devices are used to watch the digital services. PCs also over-index with the digital formats and have increased in share as digital content became more mainstream in 2018.

GfK ConsumerScope: Viewing Device Used By Format (Q1 2018)

Other (please specify) 49% 47% 75% 69% TV 87% 19% 29% Mobile Devices 13% (Smartphone + 12% 34% Tablet) 21% 12% 12% 18% PC/laptop screen EST BD VoD VoD sed DVD/ n=204 Piracy Piracy n=158 SVOD SVOD n=430 n=371 Purcha n=1194

94 AHEDA 2018 YEARBOOK DEVICES AND EMERGING VIEWING PATTERNS

One of the biggest viewing changes is within EST (Electronic Sell-Through – digital purchase). Viewership on mobile devices has increased significantly versus prior years and accounted for nearly 30% of total viewing.

GfK ConsumerScope: Viewing device used when watching EST (Q1 2018 vs. Q1 2017)

Q1 2017 Q1 2018 (n=160) (n=204)

27% 21%

49% 59% 13% 29%

PC/Laptop Screen Mobile Devices (Smartphone + Tablet) TV Other

TV - THE MOST IMPORTANT DEVICE

Most Video Entertainment content is watched on a TV, with bigger screen allowing for a greater viewing experience for consumers.

In 2018, 1.83M units were sold in the TV market, a growth of 4% on 2017. This continues the growth for TVs for the fourth consecutive year, following a period of decline. A rising share of premium features ensured that value also increased, leading TVs to become the second largest value growth category for the year (behind smartphones).

AHEDA 2018 YEARBOOK 95 DEVICES AND EMERGING VIEWING PATTERNS

GfK Retail Tracking: Key Features Unit Share of TV Market

78% 69% 65% 61% 54% 60% 50% 47% 53% =>50” 41% 39% 36% 36% 36% Smart TV 29% UHD 18%

2013 2014 2015 2016 2017 2018

Australian home sizes have hit a 22 year low with an average size of 186 m2, down 2% on 20172. This is due to the greater number of apartments than ever before; though even free-standing home sizes have shrunk by an average of 8m compared to 2017.

Australian homes rank as the second largest in the world. US homes (houses and apartments) are the biggest overall, 8% larger on average than Aussie homes.

Although home sizes are shrinking, TV sales continue to trend towards larger screens. In 2018, 60% of TVs purchased had a screen size of 50” or more. This has increased in share every year for the last 6 years. Even larger screens, greater than 65”, accounted for a quarter of market volume in 2018.

When buying a TV, smart functionality is becoming more of a standard feature. Nearly 80% of all TVs purchased in 2018 had smart functionality, a figure which rises to 96% when looking at large screen TVs over 50”. Smart TVs provide consumers with another way of directly accessing video content.

Smart TV operating systems have moved from being completely closed proprietary systems to the open operating systems seen in other devices, such as Android or Linux. This allows for greater connectivity between devices. Samsung’s Tizen OS accounts for 21% of unit sales, slightly down from 2017, but is still the largest of the branded operating systems.

2 CommSec 2018 Housing Report (Nov-18)

96 AHEDA 2018 YEARBOOK DEVICES AND EMERGING VIEWING PATTERNS

GfK Retail Tracking: Smart TV OS Unit Share

5% 15% 14% 13% 14%

21% 21% OTHERS 29% 24% WEB OS 9% TIZEN 94% LINUX 48% 24% 31% 40% FIREFOX OS CLOSED PROPRIET 26% 14% 21% 19% ANDROID

2014 2015 2016 2017 2018

Picture quality is another key development within TVs. 4K Ultra HD TVs accounted for 65% of total TV sales in 2018. Over 3 million 4K Ultra HD TVs have sold since the technology launched in Australia. When speaking to Video Entertainment consumers, understanding of 4K Ultra HD is somewhat mixed. 69% of consumers are aware of the feature, though only 40% say they have either some or a good understanding of what it does. Awareness is up versus prior years, but this indicates that further education on this technology may be needed.

Awareness and Understanding of 4K Ultra HD - Q4 2018

Yes, with good understanding 12% (could explain it to others)

Yes, some understanding 28% 69% Aware

Yes, little/no understanding 28%

Never heard of it 31%

AHEDA 2018 YEARBOOK 97 DEVICES AND EMERGING VIEWING PATTERNS

For more information on 4K Ultra HD discs, please read the GfK chapter on the Video Entertainment software market.

Newer technologies and features are helping to differentiate 4K Ultra HD TVs. Many TV manufacturers are now releasing OLED TVs. These TVs allow for more vibrant colours, ultra-thin screens and save energy by running more efficiently. Sales for OLED TVs increased by 36% in 2018 and accounted for 6% of market volume and 12% of market value.

Wide Colour Gamut (WCG) is another technology that is being incorporated into some premium TVs. TVs with this feature are able to produce a wider range of colours than standard TVs. Nearly 40% of all Ultra HD TVs purchased in 2018 had WCG technology.

MOBILE DEVICES

Consumers are using their mobile devices more than ever to watch Video Entertainment content. 23% of content watched in Q4-18 was through a mobile device, up from 20% in Q4-17. Smartphones are the main cause of this increase, driven by larger screens and an increase in digital video offerings.

Australians spent $6.2 billion on smartphones in 2018. This represented a growth of 18% in value and meant smartphones is the largest individual category GfK measures. Large screen phones are driving that value, with 62% of phones purchased in 2018 having a screen size of 5.5” or more, nearly triple the share recorded just 2 years earlier.

GfK consumer research has shown that consumers with larger screen phones are more likely to use them to watch Video Entertainment compared to those with smaller screens.

Displays for smartphones are also improving. Super AMOLED and Super Retina HD screens accounted for 36% of sales in 2018, while nearly two thirds of smartphones purchased had 4K video resolution.

GfK Retail Tracking: 5.5”+ Screen Size Unit Share of Smartphones Market

62%

41%

22% 15% 7% 4%

2013 2014 2015 2016 2017 2018

98 AHEDA 2018 YEARBOOK DEVICES AND EMERGING VIEWING PATTERNS

Mobile devices let consumers expand their viewing time and offer opportunities for greater consumption of Video Entertainment content. On-the-go viewing is a key component of this. A quarter of people say that they watch more video on-the-go compared to a year ago3. For paid digital content on mobile devices, this is fairly evenly split between those on holidays, watching on a plane, or commuting.

For more information on this topic, please read the GfK ConsumerScope chapter.

Tablets are also being used to watch Video Entertainment content, accounting for 7% of viewing time. The tablet market stabilised in 2018, following strong growth in 2017. 1.4 million tablets were sold throughout the year.

Larger screen tablets are taking a greater share in the market. Tablets that are 9.7” or larger accounted for almost 70% of all tablets purchased in 2018, up from 55% in 2017. As screen sizes for phones have topped 6” and above, smaller screen tablets have felt that impact and dropped in share.

GfK Retail Tracking: Tablet Screen Size Unit Share %

49% 44% 54% 67%

32% 35% 27% 19%

19% 18% 18% 12%

2015 2016 2017 2018

<7.9 >=7.9 <9.7 >=9.7 <11 >=11

Connected 4G tablets give consumers the ability to stream or download content outside the home. This was the growth area for tablets, increasing in volume by 10% in 2018, compared to a 2% decline for non-connected WiFi tablets. 37% of all tablets purchased in 2018 were connected tablets, the highest share since tablets launched in 2011.

3 GfK ConsumerScope 2018: On-The-Go Viewing (N=6100).

AHEDA 2018 YEARBOOK 99 DEVICES AND EMERGING VIEWING PATTERNS

PLAYERS - DVD, BLU-RAY AND CONSOLES

Watching physical discs is still very common. 32% of Australians watched a physical disc in the last month, according to GfK ConsumerScope, while 68% of households own some form of disc player.

Standalone DVD players are the most common, present in nearly half of all Australian households, followed by Blu-ray players and gaming consoles.

GfK ConsumerScope: Household Penetration Q4 2018

Total Player (incl. DVD, Blu-ray, consoles, 4K, 3D) 65% Standalone DVD Player 43% Total Blu-ray Player (incl. consoles) 41% Total 3D Blu-ray Player 18% Total 4K Player (incl. consoles) 14% Xbox One S 4% PS4 Pro 2%

0% 10% 20% 30% 40% 50% 60% 70%

Blu-ray players (incl. consoles) are now present in 41% of households, nearly matching the penetration of DVD players. Sales value for Blu-ray discs was quite stable in 2018, dropping 7%, compared to the 20% decline seen in DVD discs.

Despite the stronger performance in disc sales, standalone Blu-ray players still took a lower share of market sales in 2018, accounting for just 39% of the sales in the 12 months to March 2018.

100 AHEDA 2018 YEARBOOK DEVICES AND EMERGING VIEWING PATTERNS

GfK Retail Tracking: Video Player Type Unit Share %

39% 42% 46% 45%

57% 51% 48% 50%

MAT MARCH 2015 MAT MARCH 2016 MAT MARCH 2017 MAT MARCH 2018

DVD PLAYER DVD RECORDER BLU-RAY PLAYER BLU-RAY RECORDER

4K disc players accounted for 19% of the Blu-ray players sold in the 12 months to March 2018. A potential barrier for 4K sales is the relative lack of 4K capable households. Despite 4K TV’s making up 65% of sales in 2018, only 14% of households have a 4K Player (approximately 1.25 million households). Nearly 500, 000 4K discs were sold in 2018.

GfK Retail Tracking: 4K Ultra HD Unit Share % of Total Blu-ray Players

19%

13%

0% MAT MARCH 2015 MAT MARCH 2016 MAT MARCH 2017 MAT MARCH 2018

Gaming consoles can also be used for playing 4K content. 4% of Australian households have an Xbox One S, whilst the PS4 Pro is present in 2% of homes.

AHEDA 2018 YEARBOOK 101 DEVICES AND EMERGING VIEWING PATTERNS

DIGITAL MEDIA PLAYERS - APPLE TV AND CHROMECAST

Media Players, such as Apple TV and Chromecast, are devices which consumers can use to stream or cast their Video Entertainment content. 19% of Australian households have a media player, with the Google Chromecast being the most common, in 9% of households.

460,000 of these media players were sold in 2018, a growth of 21% on 2017. Of these, 18% were 4K capable, led by the top selling 4K device, the Chromecast Ultra.

GfK ConsumerScope: Media Player Household Penetration, Q4 2018

19%

9% 7% 4% 3% 2%

Total Media Chromecast Apple TV Fetch TV Telstra TV Other Media Player (incl. 4K) Player

2019 AND BEYOND

Devices will continue to evolve in 2019. The world’s first foldable smartphones are set to hit Australian shelves in the first half of 2019. Offering screen sizes of 7 and 8 inches plus, watching video content on a mobile device will be more appealing than ever before.

8K TVs are also set to launch in 2019. With quadruple the amount of pixels than a 4K TV, this will set the new benchmark in viewing experience. Finding available content 8K will likely be a challenge in 2019, though these TVs will likely offer up-scale options.

Rising data caps for mobile devices will also provide an opportunity to grow on-the-go viewership and add incremental sales into the market.

With all of the above, plus advancements in VR and connected home products, 2019 is set to be a year of both evolution and opportunity.

102 AHEDA 2018 YEARBOOK DEVICES AND EMERGING VIEWING PATTERNS

ABOUT GfK

To find out more, visitwww.gfk.com or follow GfK on Twitter: https://twitter.com/GfK_en

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PIRATES ON THE BACKFOOT – 2018’S RECORD CONTENT PROTECTION YEAR.

By Paul Muller Chief Executive officer, Australia New Zealand Screen Association

2018 was a very busy year for the Australia New Zealand Screen Association. We focused our content protection efforts on two strategies. The first was utilising site blocking to make it harder to access streaming and torrenting pirate sites and the second was frustrating the marketing, sales and distribution of piracy set-top boxes.

MORE AND MORE SITES BLOCKED

As Christmas 2018 approached, 85 online locations providing access to 522 domains had been blocked in Australia, as well as the online locations used by seven infringing apps.

On December 20, two further verdicts were obtained, which are effective from January 2019. The first one extended the orders for already blocked online locations by a further 55 domains. The second verdict blocked access to 78 new online piracy locations utilising 181 domains.

This means that as you read this, access to 758 piracy domains is blocked for subscribers of the major Australian ISPs.

On December 21, Village Roadshow and the six major Hollywood Studios filed their fifth site blocking case targeting a further 79 online locations comprising of 99 domains. This case is expected to be heard in the first half of 2019 making them, by a fair margin, the most prolific users of the Site Blocking legislation. Others to have filed and won court cases are Foxtel (2), Chinese broadcaster, TVB (1 alone and 1 with VRL and studios), Madman Entertainment (1 with VRL and studios) and the record labels (1).

As you can see from these actions, ANZSA’s members believe in site blocking.

Here is why:

THE PERFECT EDUCATIONAL CAMPAIGN

It is one thing for a creator to claim that piracy is wrong, but credibility increases when the message comes from Australia’s Federal Court. We estimate that there have been in excess of 26 million sessions lodged on blocked landing pages pictured here.

RESEARCH CONFIRMS IT IS EFFECTIVE

Most consumer research is survey-based. Respondents are asked about how they access content. Our research went one step further. We measured the actual volume of traffic to piracy sites, both blocked and unblocked, before and after the blocks were implemented.

Our research showed the blocks caused traffic to blocked piracy domains to drop by 70% to 90%. Once we factored in new domains used by these online locations that were not yet blocked, that dropped to 53%. The key metric, however, is the 25% reduction we saw in piracy volume overall. 1

Those objecting to the legislation had claimed that it would be ‘whack-a-mole’, that it would be ineffective. This data – measured when only half of the domains blocked today were blocked – shows otherwise. Meanwhile, a peer-reviewed independent study based on UK data not only demonstrated the same overall piracy reduction, it also showed a correlated increase of usage of 11% to legal streaming services. 2

1 INCOPRO, Site Blocking Efficacy – Key Findings – Australia, https://www.creativecontentaustralia.org.au/_literature_210629/2018_Research_-_Incopro_Study.

2 Danaher, Smith, Telang, The Effect of Piracy Website Blocking on Consumer Behavior, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2612063.

106 AHEDA 2018 YEARBOOK COPYRIGHT ENFORCEMENT AND PROTECTION

THE NEW THREAT – PIRATE STREAMING DEVICES AND APPS.

One of the biggest emerging threats is the use of pirate streaming devices and apps. These android set-top boxes are preloaded with apps that provide access to thousands of TV channels as well as a massive Netflix-like VOD catalogue. The developers of these apps charge for access to the content, without of course paying a cent to the creators of the content. In some countries these boxes are widely available and widely used. In Australia, fortunately, this is not yet the case and we are very keen to ensure it won’t.

In order to do this there are a few strategies we are employingTo prevent that there are a few strategies we are employing.

ENCOURAGE DISTRIBUTORS OF PIRACY SET-TOP BOXES TO CEASE THEIR ACTIVITIES.

Under the auspices of the Alliance for Creativity and Entertainment (ACE) we have identified, investigated and approached twenty-two distributors in Australia and New Zealand in 2018. We continue discussions with some of them, but most have signed legally-binding undertakings to cease the sale of these preloaded boxes immediately. Virtually all targets spoken to have ceased the sale/distribution of these illegal streaming devices. We estimate that the ACE actions has resulted in the removal from sale and deactivated thousands of illegal streaming devices and their apps, (each targeted device provided illegal access to thousands of live TV channels and unlimited VOD content), thus leaving the consumers who purchased them with a very expensive paperweight.

WORK WITH E-COMMERCE PLATFORMS TO REMOVE ADVERTISEMENTS FOR THESE PRODUCTS.

Amazon and eBay have been very cooperative in removing ads that utilise agreed red-flag key words such as free movies and jailbroken. When notified with specific examples of infringement using these devices, Facebook, YouTube and Google remove these specific examples.

DISRUPT THE FUNCTIONING OF PIRACY APPS BY BLOCKING ACCESS TO THE ONLINE LOCATIONS USED BY THESE APPS IN ORDER TO FUNCTION.

Given the low penetration levels of piracy devices and apps in Australia, this is not the most cost- effective option at this stage, but we felt it was essential to create a legal precedent so, one of the site blocking cases Village Roadshow and the six major studios filed, was against a piracy app named HD

We forensically investigated the app and discovered it connected to a variety of servers for its functioning.

• An authentication server - to validate the user had paidth required subscription.

• An update server – to download software updates.

• An electronic program guide – to enable the user to search and navigate the illegal screen content that was made available which, in turn, redirected the user to content servers illegally hosting the content.

We successfully obtained orders to block access to all of these, leading to the shutdown of the App.

2019 AND BEYOND

The legislative environment, thanks to some hard work by AHEDA and ANZSA, has provided some effective tools to increase friction for those trying to access illegal content, thus helping to create a better environment for legitimate players to operate in. We will continue to identify illegal alternatives to the legitimate consumption of screen content and look for ways to stop them.

108 AHEDA 2018 YEARBOOK “As you read this, access to 758 piracy domains is blocked for subscribers of the major Australian ISPs”

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KEEPS ITS FOOT ON THE ACCELORATOR

By Lori Flekser Executive Director, Creative Content Australia

2018 proved to be an extraordinary year for local and global copyright issues with Creative Content Australia playing a key role in supporting stakeholder advocacy and policy work.

Focussing on our key strengths – research and education – CCA’s role in change is demonstrable.

THE UNDENIABLE EVIDENCE PROVIDED BY INDEPENDENT RESEARCH

The impact of a decade of policy and advocacy work, together with the hard-won legislative changes, is clearly demonstrated in CCA’s annual tracking research. The 2018 piracy research study in particular validates how effective the work has been in escalating the friction to accessing infringing sites while the availability of legal content increases.

Since 2017, there has been a decline in the number of Australian teens (12-17yo) and adults (18-64yo) accessing pirated screen content online.

PERCENTAGE OF ACTIVE PIRATES IN AUSTRALIA

35% 29% 30% 26% 25% 26% 23% 25% 21% 21% 19% 20% 18% 15% 10% 5% 0% 2014 2015 2016 2017 2018

12-17yo 18-65yo

The research also shows a decline in the frequency of piracy activity and an increase in the use of legitimate services.

AHEDA 2018 YEARBOOK 111 CREATIVE CONTENT AUSTRALIA

RESEARCH SUPPORTS STAKEHOLDER ACTIVITY

CCA assists the site blocking work undertaken by its members by tracking changes in behaviour and attitudes to piracy and measuring how blocking deliberately causes friction in the piracy process.

The 2018 research validates the efficacy of site blocking, demonstrating that the frequency of streaming and downloading pirated movies and TV shows is declining amongst adults and teens. The study also shows a majority of Australians support the blocking of piracy sites and apps– an important indicator to Government that resistance to legislative protections is low.

Significantly, the research highlights a significant shift in consumer attitudes. In previous years, the notion that “everyone is doing it” was a key motivating factor and a primary rationale for content piracy. In 2012, 66% of Australians agreed that “Accessing Pirated content is something that everyone does nowadays”. Only 32% of Australians agree with this statement in 2018.

AGREE: 32% “Accessing Pirated content is something that everyone does 66% nowadays”

2012 2018

Consumer messaging and education PIRACY IS NO resources appear to be playing a part in LONGER THE winning “hearts and minds”, while exposure to emotive and strategic messaging may SOCIAL NORM. also be impacting consumer attitudes.

112 AHEDA 2018 YEARBOOK CREATIVE CONTENT AUSTRALIA

A CONSISTENT LINE UP OF PERSUASIVE CONSUMER CAMPAIGNS

To reinforce the connection between piracy Say No to Piracy played across Metro TV and Australia’s film and television industries, (Seven, Nine, Ten/MCN), Subscription (Foxtel/ CCA released the ‘Say No to Piracy’ consumer MCN), Regional (Prime, Southern Cross), Digital campaign in February 2018. (Seven, Nine), achieving a total value of over $1,4m. The campaign was launched only four months after the widely-viewed Bryan Brown Price Additionally, it was screened in major and of Piracy campaign and digressed from its’ independent cinemas across Australia, as more sombre tone by celebrating home-grown community service announcements on Foxtel creativity and displaying the diversity and and ABC TV, in Fitness First gyms and on Virgin number of behind-the-scenes professionals it Airlines in-flight entertainment program. And takes to make screen content. it was included on locally produced DVD’s and blu-rays. The clip highlighted a few of Australia’s most successful and beloved films and TV shows, The campaign launch also triggered positive confirming that we have some of the best media coverage across the major mastheads, screen professionals in the world. Piracy television (including Channel 10’s The Project) jeopardises not only local jobs and livelihoods, and radio. but also the future of great Australian stories that promote our culture and way of life. NEWS >> “SAY NO TO PIRACY” CAMPAIGN

Moreover, the creative sector is a significant SITE BLOCKING PROVES EFFECTIVE contributor to the Australian economy - the creation of Australian screen content injects $3 IN CLOSING ‘FRONT DOOR’ TO billion into the Australian economy annually, ONLINE PIRACY generating tens of thousands of jobs.

AHEDA 2018 YEARBOOK 113 CREATIVE CONTENT AUSTRALIA

CONTINUED PRESSURE ON TECH COMPANIES TO MITIGATE PIRACY

With site blocks “shutting the front door” to infringing online locations, the battle continued to have search engines close “the back door”. The October 2018 legislation requires Google to delist pirate sites and proxy sites that show work-arounds to reach blocked sites. Throughout 2018, Graham Burke, CCA’s Chairman and Village Roadshow co-chief executive, along with other CCA members and creative industry leaders, was vocal in encouraging the search giant to work proactively with rightsholders to increase barriers to locating infringing content sites and services.

The role of search engines is particularly pertinent in the light of CCA’s March 2018 study into how search engines not only facilitate but also promote piracy. Seventy percent of Australians use search to find content and, although fourty-four percent were not looking for infringing content, there’s evidence that new pirates are drawn into infringement when the top searches identify pirate sites. Autocomplete exacerbates piracy by steering users to previously unknown pirate sites.

70% 44% 47% of new pirates use search in of new pirates were NOT of pirates who encounter discovering a source of looking for infringing blocked sites use search content for the ﬁrst time. content when they to discover an alternative initially found it

INDUSTRY STRENGTH IN UNITY

Creative Content Australia continues to deliver valuable research data to Government and media to support arguments for copyright protection.

More importantly, our work demonstrates that the creative industry does not simply rely on legislative intervention by Government but is actively reducing piracy by providing substantial funds to copyright research and education.

CCA’s stakeholders represent screen content organisations and associations engaged in taking a creative idea through to its delivery to an audience. Through CCA, they demonstrate the industry’s leadership and commitment to unify and speak out for strong copyright protection and against copyright theft.

114 AHEDA 2018 YEARBOOK “70% of new pirates use search in discovering a source of content for the first time”

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116 AHEDA 2018 YEARBOOK AUSTRALIAN THEATRICAL FILM MARKET IN 2018

MPDAA CONTRIBUTION

By Joel Pearlman, MPDAA Chair & CEO, Roadshow Films & Lori Flekser, MPDAA Executive Director

Australian audiences “voted” with their feet in 2018, signaling that seeing great screen content on the big screen is an entrenched part of Australian culture. The Australian box office closed out 2018 up 3.6 percent at $1,245 billion.

Australian Box O ce Revenue 2014-2018

1,300 1,259 1,245 1,250 1,226 1,201 1,200

1,150

1,100 1,074 1,050

1,000

950 2014 2015 2016 2017 2018

Disney’s Avengers: Infinity War took line honours, closing 2018 at $61.8m, followed by Incredibles 2, also from Disney, at $45.7m.

Still playing into its 12th week in cinemas at the end of 2018, the 2018 cume for Bohemian Rhapsody (Fox) was $42.4m1, with Black Panther (Disney) at $40.8 and Deadpool 2 (Fox) at $36m.

The other top performing films of the year wereJurassic World: Fallen Kingdom (Universal $35.5m), Jumanji: Welcome to the Jungle (Sony Pictures $32.9m), A Star is Born (Warner Bros $32.8m) and The Greatest Showman (Fox $27.5m). Rounding out the Top 10 films was Sony Pictures’ Australian collaboration Peter Rabbit ($26.7m).

1 Figures reflect the Box Office revenue for 2018 only.

AHEDA 2018 YEARBOOK 117 AUSTRALIAN THEATRICAL FILM MARKET IN 2018

TOP 10 FILMS OF 2018

TITLE DISTRIBUTOR 2018 REVENUE 1 AVENGERS: INFINITY WAR WALT DISNEY 61,868,117 2 INCREDIBLES 2 WALT DISNEY 45,768,667 3 BOHEMIAN RHAPSODY* FOX 42,408,622 4 BLACK PANTHER WALT DISNEY 40,800,940 5 DEADPOOL 2 FOX 36,048,688 6 JURASSIC WORLD: FALLEN KINGDOM UNIVERSAL 35,535,713 7 JUMANJI: WELCOME TO THE JUNGLE SONY PICTURES 32,922,785 8 A STAR IS BORN* WARNER BROS 32,826,537 9 THE GREATEST SHOWMAN FOX 27,582,159 10 PETER RABBIT SONY PICTURES 26,750,712 TOTAL $382,512,940

* Still in release. Box Office for 2018 only

Several Box Office records were broken in Australia in 2018. Notably, Anzac Day became the highest grossing single day ever at the Australian Box Office with $11.2m taken that day.

While cinema operators continued to upgrade seating, audio and screen technology and increase food and beverage choices, audiences also benefited from a drop in average ticket prices: from$14.13 in 2017 to $13.86 in 2018.

Across the world, a visit to the cinema remains one of the most popular leisure options with the global box office generating in excess of 40 Billion dollars for the very first time. This is fuelled by accelerated growth in emerging markets and more conservative growth in mature markets.

Substantial investments are made by distributors into the production and marketing of the most compelling content possible. Advertising investments ensure awareness for our content is driven via traditional media such as TV, Outdoor, Radio and Print. This is complimented by vast reach across digital channels and social media through our owned assets and earned investments. Whether that’s working with influencers or bringing talent to Australia to support releases, enormous effort is placed on ensuring films arrive in cinemas with heightened consumer interest and awareness.

For the third consecutive year the MPDAA has undertaken independent research to increase insight into the habits of Australian audiences. We now have data revealing behavioural and attitudinal trends. The research survey by SARA (Screen Audience Research Australia) shows that cinema is holding on to core consumers. Visits by frequent cinema-goers in Australia (once a month or fortnightly) have not declined. Importantly, these patrons have increased the average number of films they see each year – from 13 visits per year in 2016 to 16 visits in 2018.

118 AHEDA 2018 YEARBOOK AUSTRALIAN THEATRICAL FILM MARKET IN 2018

This research also shows that audience perceptions of value for money have remained stable over three years, with 37 percent of cinema-goers saying it was good/excellent, 40 percent saying it was OK and only 23 percent saying it was poor.

Compared with SVOD, which is associated with comfort and value for money, Australians aged 15-17 see the cinema experience as “great to watch with friends” (78 percent), “excellent picture quality” (73 percent) and “a great way to access new releases” (60 percent).

Australian audiences have more choice of films than ever before, with 758 new titles, from over 39 countries, released in cinemas in 2018.

Number of new ﬁlms released in Australian cinemas

800 758 697 700 609 600

500 421 400 308 300

200

100

0 2006 2013 2016 2017 2018

AHEDA 2018 YEARBOOK 119 AUSTRALIAN THEATRICAL FILM MARKET IN 2018

2018 was a great year for Australian films headed by Peter Rabbit (Sony Pictures $26.7m) and Ladies In Black (Sony Pictures $12m). Australian films represented a notable 4.5 percent of the total box office.

There were 92 Australian films screened, with a record- breaking 63 being new titles. This number included documentaries, special-events (e.g. Australian Ballet: The Merry Widow) and micro-budget films on limited release.

Simon Baker’s Breath and Warwick Thornton’s Sweet Country were stand-outs, garnering both critical and audience approval.

Peter Rabbit was also the top performing Australian film internationally, taking over $463 million (cumulative) across 88 territories excluding Australia. It became the highest earning Australian film of all time in the UK. Animal Logic are currently in pre-production for the sequel.

Despite the strong 2018 results, there are still a number of challenges to be faced, including the continuing battle with copyright theft which eats at the heart of the creative community.

However, distributors are confident that the cinema experience will continue to be compelling and relevant to audiences. And, with, cinemas improving technology, seating and booking options and distributors signalling an extraordinary range of great films, 2019 promises to be another great year at the movies.

120 AHEDA 2018 YEARBOOK “Australian audiences have more choice of films than ever before, with 758 new titles, from over 39 countries, released in cinemas in 2018.”

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122 AHEDA 2018 YEARBOOK AHEDA MEMBERS DIRECTORY 2019

AHEDA ROADSHOW ENTERTAINMENT Level 33, Australia Square, Level 4, 235 Pyrmont Street, 264 George Street, Pyrmont NSW 2009 Sydney NSW 2000 Tel: (02) 9552 8600 Tel: (02) 9258 1971 Fax: (02) 9552 2510 Fax: (02) 9258 1111 www.roadshow.com.au Chief Executive: Simon Bush Co-CEO: Chris Chard CSO: John Davie DEFIANT SCREEN CMO: Phil Oneile Marketing Director: Amanda Allegos ENTERTAINMENT Suite 1001, 4 Daydream Street STUDIOCANAL AUSTRALIA Warriewood NSW 2102 Level 2, 47-49 Murray Street, Tel: (02) 9997 3936 Pyrmont NSW 2009 Fax: (02) 9997 3938 Tel: (02) 9003 3980 http://www.defiant-ent.com/ studiocanal.com.au Managing Director: Marilyn Greig CEO Australia & New Zealand: Elizabeth Sales Director: Michelle Godmaire Trotman Operations Director: Geoff Doyle Head of Home Entertainment & Business Finance Director: Glenn Casey Development ANZ: Graeme Rogan

MADMAN ENTERTAINMENT TWENTIETH CENTURY FOX PTY LTD HOME ENTERTAINMENT Level 2, 289 Wellington Parade South Level 3, Frank Hurley Grandstand, East Melbourne VIC 3002 Fox Studios Australia, Tel: (03) 9261 9200 38 Driver Ave, Fax: (03) 9261 9211 Moore Park NSW 2021 www.madman.com.au Tel: (02) 8353 2100 www.foxmovies.com.au Joint Managing Director ANZ: Paul Wiegard Director of Sales: Elizabeth Allen Senior Vice President, Director of PR & Marketing: Lee-Ann Woon Australia & Japan: Flavio Paoli Director of Operations: Michael Hillyard Director of Operations Australia: Wendy Fraser Director of Sales Australia: Kerry Drinkwater Director of Marketing Australia: Claire Bryant PARAMOUNT HOME MEDIA Vice President, Finance, Asia Pacific: Mats Weiss INTERNATIONAL; APAC Level 1, 65 Pirrama Road UNIVERSAL SONY PICTURES PYRMONT NSW 2009 Tel: (02) 9265 0200 HOME ENTERTAINMENT VP Digital Content/Marketing APAC: (AUSTRALIA) PTY LTD Richard Clarkson Level 30, 1 Market Street, Commercial Director APAC: Boh Clancy Sydney NSW 2000 Director, Regional Sales TV Distribution: Tel: (02) 9266 2800 Joyce Smith www.facebook.com/TheViewingLounge Brand Manager Digital Content/Marketing Managing Director: Jim Batchelor APAC: Lauren Kennedy Operations Director: Kate Bradbury Sales Director: Rob Davey Director of Marketing & Corporate Strategy: Cindy McCulloch

AHEDA 2018 YEARBOOK 123 AHEDA MEMBERS DIRECTORY 2019

WALT DISNEY COMPANY (AUSTRALIA) PTY LTD Melbourne Office: Building 10, Level 3, 658 Church Street Richmond VIC 3121 Tel: (03) 9832 6000 Fax: (03) 9826 0824 Sydney Office: Level 3, 68 York Street SYDNEY NSW 2000 Tel: (02) 8622 8444 www.disney.com.au Senior Vice President & Managing Director ANZ: Kylie Watson-Wheeler GM, Disney Consumer Products & Retail ANZ: Meagan Sanders GM of Studios & Live Entertainment: Jo Bladen

Associate members FOXTEL Angus Pitt www.foxtel.com.au

TECHNICOLOR Iain Fynes-Clinton www.technicolor.com.au

TELSTRA Andrew Geldens www.telstra.com.au

124 AHEDA 2018 YEARBOOK “The total paid film and TV market in Australia is worth over $2.2 billion and growing”

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DIGITAL SERVICES

DIGITAL SERVICES: TRANSACTIONAL MOVIES AND TV

Table 1

COMPANY SERVICE BUSINESS MODEL RENTAL LAUNCH RETAIL LAUNCH DATE DATE Telstra BigPond Movies Rental Q1 06 Apple iTunes Store Rental, retail Q3 08 Q4 10 Kanopy Kanopy Rental Q4 08 Foxtel Foxtel Store (formerly Rental Q4 09 Foxtel Download) Microsoft Microsoft Movies & TV Rental, retail Q4 09 (formerly Xbox Video) Sony Interactive PlayStation Store Rental, retail Q2 10 Q2 10 Entertainment Fetch TV Fetch TV Rental, retail Q2 10 Q2 15 iiNet iiNet TV with Fetch Rental Q2 10 Beamafilm Beamafilm Rental Q1 11 Optus Optus TV with Fetch Rental Q4 11 Quickflix Quickflix Rental Q1 12 Google Google Play Movies Rental, retail Q2 12 Q4 12 Vimeo Vimeo On Demand Rental, retail Q2 13 Q2 13

AHEDA 2018 YEARBOOK 127 APPENDIX: DIGITAL SERVICES

DIGITAL SERVICES: SUBSCRIPTION VIDEO SERVICES

Table 2

COMPANY SERVICE BUSINESS MODEL LAUNCH DATE Telstra Mobile Foxtel Bundled telco product Q4 06 MUBI MUBI Standalone Q1 09 Bigstar TV Big Star Movies Standalone Q4 09 Indieflix Indieflix Standalone Q4 09 Fetch TV Fetch TV Standalone/Pay TV Q2 10 iiNet iiNet TV with Fetch Bundled telco product Q2 10 Beamafilm Beamafilm Standalone Q1 11 Quickflix Quickflix Standalone/Bundled Q4 11/Q2 13 with DVD rentals Optus Optus TV with Fetch Bundled telco product Q4 11 Foxtel Foxtel App (formerly Foxtel Go) Bundled/Pay TV Q4 12 Foxtel Foxtel Now (formerly Foxtel Play) Standalone/Pay TV Q3 13 WWE WWE Network Standalone Q3 14 Nine Entertainment Stan Standalone Q1 15 Netflix Netflix Standalone Q1 15 Curiosity Stream Curiosity Stream Standalone Q4 15 Eros International Eros Now Standalone Q1 16 Ellation Crunchyroll Standalone Q1 16 NBC Universal Hayu TV Standalone Q1 16 YouTube YouTube Red Standalone Q2 16 Madman Entertainment y DocPla Standalone Q4 16 Amazon Amazon Prime Video Standalone Q4 16 Foxtel Kayo Sports Standalone Q4 18 Ten Network / CBS 10 All Access Standalone Q4 18 iWonder iWonder Standalone Q1 19 Madman DocPlay Standalone Q4 16 Madman AnimeLab Standalone Q2 14 Madman Garage Standalone Q1 18

128 AHEDA 2018 YEARBOOK APPENDIX: DIGITAL SERVICES

PAY TV SERVICES: TRANSACTIONAL MOVIES AND TV Table 3

COMPANY PLATFORM TECHNOLOGY BUSINESS MODEL LAUNCH DATES Foxtel Cable nVoD Rental 1999 Optus TV Cable nVoD Rental 1999 Foxtel Satellite nVoD Rental 1999 Optus TV with Foxtel Cable nVoD Rental 2002 Foxtel On Demand Satellite Push-VoD Rental 2007 Foxtel Anytime Satellite IP-VoD Rental 2008 Fetch TV IPTV/OTT IP-VoD/OTT Rental 2010

AHEDA 2018 YEARBOOK 129 APPENDIX: DIGITAL SERVICES

DEFINITIONS AND EXAMPLES Table 4

TERM DEFINITION AND EXAMPLES Digital Video Refers to retail and rental transactional and subscription movies and TV content purchases via both the open internet (online) and closed pay TV networks (Pay TV on-demand). Digital Retail A method of selling digital content that gives the customer ownership over the files they have downloaded, allowing the customer to use the content as many times as they like - the digitally distributed equivalent of conventional retail channels. Digital retail is also known as ‘download-to-own’ (DTO), ‘electronic sell-thru’ (EST) and ‘digital sell through’. Excludes free, subscription, and adult content. Digital Rental A method of renting digital content whereby customers commonly choose content on an a la carte basis and pay to watch it for a limited period. Digital rental is also known as Video-on-Demand (VoD) and Pay Per View (PPV). PPV content can be downloaded or streamed. Excludes free, subscription, events and adult content. For example, a movie rental through iTunes. Pay TV On-Demand (Pay TV VoD) The practice of paying for a rental on an a la carte basis over a closed pay TV network. Formally speaking it applies to a temporary right of use that is purchased by a one-off payment. It can be either movies or TV shows. For example, a movie rental through Foxtel’s satellite TV platform. Digital Subscription Subscription services provide access to content in return for a recurring fee. Fees may be paid annually, monthly or weekly. For example, Netflix, Stan, and Foxtel Now.

130 AHEDA 2018 YEARBOOK APPENDIX: DIGITAL SERVICES

METHODOLOGY Table 5

METHODOLOGY Data • The data is an aggregate of participating AHEDA members, and not a market total unless placed in an international context for comparative purposes.

• The data reported to IHS Markit is units and either consumer or trade (distributor) revenue. This data is analysed to produce totals for both consumer and trade revenues; which is to say we do not simply sum the provided consumer data to produce the consumer total and provided trade data to provide the trade total. Instead we mark up and mark down the provided data as appropriate to provide a fuller assessment of the market. For example, TV EST revenue provided by Studio A at a consumer level is marked down to estimate Studio A’s trade revenue; while Studio B, providing trade revenue, is marked up to reach the consumer total.

• To estimate these mark-up factors, we use a mixture of i.) participant feedback, ii.) our knowledge of international digital home entertainment practices, iii.) the data provided by the participants as a benchmark for average per-transaction price.

• TV series sales are reported as one transaction and not by the volume of episodes sold. e.g. a purchase of Season 1 of a TV series is reported as one transaction and not 22 episodes.

• Zero price transactions are excluded from reporting. Only items where a standard wholesale price is paid to the studio are included. Bundled promotions where there is a flat up-front fee paid to the studio are excluded.

Revenue & GST • Revenue is reported at consumer level and is reported exclusive of Goods & Services Tax (GST).

Spending & GST • Spending is reported inclusive of Goods & Services Tax (GST).

Average Selling Price (ASP) • Consumer average selling price (ASP) is inclusive of GST as this allows participants to calculate the total consumer spend by multiplying the consumer ASP against the number of units.

AHEDA 2018 YEARBOOK 131 APPENDIX: DIGITAL SERVICES

EXCHANGE RATES: US DOLLAR Table 6

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $1= $1= $1= $1= $1= $1= $1= $1= $1= $1= $1= $1= Australia AUD 0.97 0.97 1.04 1.11 1.33 1.35 1.30 1.34 1.34 1.34 1.34 1.34 France EUR 0.72 0.78 0.75 0.75 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 Germany EUR 0.72 0.78 0.75 0.75 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 Italy EUR 0.72 0.78 0.75 0.75 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 Spain EUR 0.72 0.78 0.75 0.75 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 UK GBP 0.62 0.63 0.64 0.61 0.65 0.74 0.78 0.75 0.75 0.75 0.75 0.75 US USD 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

132 AHEDA 2018 YEARBOOK APPENDIX: DVD AND BLU-RAY SALES CHARTS

CHILDREN’S

Sales of Children’s titles (titles aimed at children, with a running time under 60 minutes and not released theatrically) experienced a year-on-year decline of 27% in 2018, a similar level of decline to that recorded in 2017 and the largest of any of the release type sectors.

There were just under 200 Children’s titles released in 2018, 10% fewer than 2017. However the biggest decline in Children’s titles came from titles which are in their second year of release. This is an after- effect of 2017, where 40% fewer Children’s titles were released that year.

GfK Retail Tracking: Childrens Value % Change, 2018 vs. 2017

-20% New Release (0-13)

-22% Recent (14-52)

-46% Back Catalogue (53-104)

-20% Deep (105+)

One area that did see an increase within Children’s title was the Blu-ray format, which grew by 43% in value and accounted for 7% of total sales (up from 4% in 2017).

Paramount’s ‘Paw Patrol’ was the top selling Children’s license of the year, while Madman’s Dragonball Z moved up to the number two spot, displacing Lego.

AHEDA 2018 YEARBOOK 133 APPENDIX: DVD AND BLU-RAY SALES CHARTS

GfK Retail Tracking: Top 10 Selling Licenses, Children’s, 2018, Ranked By Volume

LICENSE DISTRIBUTOR PAW PATROL PARAMOUNT DRAGONBALL Z MADMAN WIGGLES ROADSHOW LEGO UNIVERSAL PEPPA PIG 20TH CENTURY FOX PJ MASKS 20TH CENTURY FOX DISNEY MICKEY MOUSE WALT DISNEY STUDIOS DRAGON BALL MADMAN THOMAS & FRIENDS ROADSHOW BLAZE & THE MONSTER MACHINES PARAMOUNT

CATEGORIES: OTHER DIRECT TO VIDEO

‘Other’ titles in the disc market include genres such as documentaries, anime and sport titles.

Direct to Video Live Action Movies dropped by just 2% in 2018 and was the largest category with Other Direct to Video. Anime was the next biggest category, though sales dropped by 18% compared to 2017. Documentary titles round out the top 3, generating $6.5 million in revenue in 2018.

GfK Retail Tracking: Other Direct to Video Genre Value by Year

$25 -2% -18% -23% -28% -28% -24%

Millions $20 $19.2 $18.9

$15 $12.2 2017 $9.9 2018 $10 $8.5 $6.5 $7.1 $6.9 $5.1 $5.0 $5 $2.2 $1.7

$0 LIVE ACTION ANIME DOCUMENTARY ANIMATED SPORT/ MUSIC MOVIES MOVIES HEALTH

134 AHEDA 2018 YEARBOOK APPENDIX: DVD AND BLU-RAY SALES CHARTS

GfK Retail Tracking: Top Selling Documentaries, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR 1 BLUE PLANET II ROADSHOW 2 ELVIS PRESLEY THE SEARCHER SONY PICTURES 3 PLANET EARTH II ROADSHOW 4 BLUE PLANET / BLUE PLANET II ROADSHOW 5 THE GHAN AUSTRALIAS GREATEST TRAIN JOURNEY BEYOND 6 BLUE PLANET ROADSHOW 7 SNIPER THE LONE MARKSMAN BEYOND 8 VIETNAM WAR (2017) BEYOND 9 JOANNA LUMLEYS JAPAN REEL 10 TRUE STORIES OF WW II BEYOND

For Anime, Madman Entertainment titles dominate and accounted for 6 of the top 10 sellers.

GfK Retail Tracking: Top Selling Anime Titles, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR 1 MY NEIGHBOR TOTORO MADMAN ENTERTAINMENT 2 ATTACK ON TITAN SEASON 2 MADMAN ENTERTAINMENT 3 MY HERO ACADEMIA SEASON 2 PART 1 UNIVERSAL 4 MY HERO ACADEMIA SEASON 2 PART 2 UNIVERSAL 5 PRINCESS MONONOKE MADMAN ENTERTAINMENT 6 LAPUTA CASTLE IN THE SKY MADMAN ENTERTAINMENT 7 RWBY VOL 5 SHOCK RECORDS 8 RONJA THE ROBBERS DAUGHTER MADMAN ENTERTAINMENT 9 MY HERO ACADEMIA SEASON 1 UNIVERSAL 10 KIKIS DELIVERY SERVICE MADMAN ENTERTAINMENT

And finally, within the Sport, Health and Fitness genres, AFL fans from the west rejoiced in their team’s premiership, with the West Coast Eagles Premiership title taking top spot.

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GfK Retail Tracking: Top Selling Sport And Health And Fitness Titles, Full Year 2017, Ranked by Volume

RANK TITLE DISTRIBUTOR GENRE 1 AFL PREMIERS 2018 WEST COAST EAGLES BEYOND SPORT 2 WWE WRESTLEMANIA 34 MADMAN ENT. SPORT 3 WWE ROYAL RUMBLE 2018 MADMAN ENT. SPORT 4 WWE SUPER SHOWDOWN 2018 MADMAN ENT. SPORT 5 AFL PREMIERS 2017 RICHMOND BEYOND SPORT 6 WWE SURVIVOR SERIES 2017 MADMAN ENT. SPORT 7 NBA ULTIMATE JORDAN BEYOND SPORT 8 AFL PREMIERS 2017 RICHMOND TIGERS VICTORY PACK BEYOND SPORT 9 ZUMBA FITNESS UNIVERSAL HEALTH & FIT 10 FERRARI RACE TO IMMORTALITY UNIVERSAL SPORT

TOP SELLER CHARTS BY FILM GENRE

GfK Retail Tracking: Top Selling Action Titles, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR GENRE 1 THOR RAGNAROK WALT DISNEY STUDIOS ACTION 2 DEADPOOL 2 20TH CENTURY FOX ACTION 3 BLACK PANTHER (2018) WALT DISNEY STUDIOS ACTION 4 JUSTICE LEAGUE (2017) ROADSHOW ACTION 5 RAMPAGE (2018) ROADSHOW ACTION 6 DEADPOOL 20TH CENTURY FOX ACTION 7 TOMB RAIDER (2018) ROADSHOW ACTION 8 KINGSMAN THE GOLDEN CIRCLE 20TH CENTURY FOX ACTION 9 OCEANS 8 ROADSHOW ACTION 10 SKYSCRAPER UNIVERSAL ACTION

136 AHEDA 2018 YEARBOOK APPENDIX: DVD AND BLU-RAY SALES CHARTS

GfK Retail Tracking: Top Selling Adventure Titles, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR GENRE 1 MARVEL THE AVENGERS INFINITY WAR WALT DISNEY STUDIOS ADVENTURE 2 JUMANJI (2017) WELCOME TO THE JUNGLE SONY PICTURES ADVENTURE 3 JURASSIC WORLD 2 FALLEN KINGDOM UNIVERSAL ADVENTURE 4 ANT-MAN AND THE WASP WALT DISNEY STUDIOS ADVENTURE 5 SPIDERMAN HOMECOMING SONY PICTURES ADVENTURE 6 MAZE RUNNER THE DEATH CURE 20TH CENTURY FOX ADVENTURE 7 THE SHAPE OF WATER 20TH CENTURY FOX ADVENTURE 8 JURASSIC WORLD UNIVERSAL ADVENTURE 9 FANTASTIC BEASTS & WHERE TO FIND THEM ROADSHOW ADVENTURE 10 GUARDIANS OF THE GALAXY VOL 2 WALT DISNEY STUDIOS ADVENTURE

GfK Retail Tracking: Top Selling Animated Titles, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR GENRE 1 COCO (2017) WALT DISNEY STUDIOS ANIMATED 2 INCREDIBLES 2 WALT DISNEY STUDIOS ANIMATED 3 FERDINAND (2017) 20TH CENTURY FOX ANIMATED 4 MOANA WALT DISNEY STUDIOS ANIMATED 5 HOTEL TRANSYLVANIA 3 SUMMER VACATION SONY PICTURES ANIMATED 6 SING (2016) UNIVERSAL ANIMATED 7 THE EMOJI MOVIE SONY PICTURES ANIMATED 8 FROZEN (2013) WALT DISNEY STUDIOS ANIMATED 9 INCREDIBLES WALT DISNEY STUDIOS ANIMATED 10 CAPTAIN UNDERPANTS THE FIRST EPIC MOVIE 20TH CENTURY FOX ANIMATED

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GfK Retail Tracking: Top Selling Comedy Titles, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR GENRE 1 PITCH PERFECT 3 UNIVERSAL COMEDY 2 DADDYS HOME 2 PARAMOUNT COMEDY 3 BAD MOMS 2 ROADSHOW COMEDY 4 BLOCKERS UNIVERSAL COMEDY 5 CRAZY RICH ASIANS ROADSHOW COMEDY 6 BAYWATCH (2017) PARAMOUNT COMEDY 7 BOOK CLUB (2018) SONY PICTURES COMEDY 8 GAME NIGHT ROADSHOW COMEDY 9 I FEEL PRETTY 20TH CENTURY FOX COMEDY 10 GIRLS TRIP (2017) UNIVERSAL COMEDY

GfK Retail Tracking: Top Selling Drama Titles, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR GENRE 1 THE GREATEST SHOWMAN 20TH CENTURY FOX DRAMA 2 FIFTY SHADES FREED UNIVERSAL DRAMA 3 WONDER ROADSHOW DRAMA 4 VICTORIA & ABDUL UNIVERSAL DRAMA 5 THREE BILLBOARDS OUTSIDE EBBING MISSOURI 20TH CENTURY FOX DRAMA 6 THE MOUNTAIN BETWEEN US 20TH CENTURY FOX DRAMA 7 DARKEST HOUR (2017) UNIVERSAL DRAMA 8 HIDDEN FIGURES 20TH CENTURY FOX DRAMA 9 LADIES IN BLACK SONY PICTURES DRAMA 10 FIFTY SHADES DARKER UNIVERSAL DRAMA

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GfK Retail Tracking: Top Selling Sci-Fi Titles, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR GENRE 1 STAR WARS EPISODE VIII THE LAST JEDI WALT DISNEY STUDIOS SCI-FI 2 SOLO A STAR WARS STORY WALT DISNEY STUDIOS SCI-FI 3 BLADE RUNNER 2049 SONY PICTURES SCI-FI 4 READY PLAYER ONE ROADSHOW SCI-FI 5 PACIFIC RIM UPRISING UNIVERSAL SCI-FI 6 TRANSFORMERS THE LAST KNIGHT PARAMOUNT SCI-FI 7 THE PREDATOR (2018) 20TH CENTURY FOX SCI-FI 8 WAR FOR THE PLANET OF THE APES 20TH CENTURY FOX SCI-FI 9 ALIEN COVENANT 20TH CENTURY FOX SCI-FI 10 THE MARTIAN 20TH CENTURY FOX SCI-FI

GfK Retail Tracking: Top Selling Titles – All Other Genres Combined, Full Year 2018, Ranked by Volume

RANK TITLE DISTRIBUTOR GENRE 1 MAMMA MIA HERE WE GO AGAIN UNIVERSAL MUSICAL 2 DUNKIRK (2017) ROADSHOW WAR 3 MURDER ON THE ORIENT EXPRESS (2017) 20TH CENTURY FOX THRILLER 4 RED SPARROW 20TH CENTURY FOX THRILLER 5 THE MEG ROADSHOW HORROR 6 IT (2017) ROADSHOW HORROR 7 GEOSTORM ROADSHOW THRILLER 8 A QUIET PLACE PARAMOUNT HORROR 9 HACKSAW RIDGE 20TH CENTURY FOX WAR 10 ATOMIC BLONDE UNIVERSAL THRILLER

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THE BEST OF ALL TIME: LIFE-TO-DATE SALES

The GfK disc Video Entertainment measurement turned 21 in 2018, with GfK first measuring sales back in 1997.

Disney’s Finding Nemo is the top selling title of that time, having launched in 2004 on physical disc. Lion King currently sits at number 9, though we may see a resurgence in sales when the live action version is released in 2019.

GfK Retail Tracking: Top Selling Titles, Life To Date, Ranked by Volume

RANK TITLE DISTRIBUTOR RELEASE DATE 1 FINDING NEMO WALT DISNEY STUDIOS 13/01/2004 2 AVATAR (2009) 20TH CENTURY FOX 29/04/2010 3 HARRY POTTER & THE PHILOSOPHERS STONE ROADSHOW 28/05/2002 4 SHREK 20TH CENTURY FOX 7/11/2001 5 MONSTERS INC WALT DISNEY STUDIOS 30/09/2002 6 LORD OF THE RINGS FELLOWSHIP OF THE RING ROADSHOW 6/08/2002 7 HARRY POTTER & THE CHAMBER OF SECRETS ROADSHOW 11/04/2003 8 FROZEN (2013) WALT DISNEY STUDIOS 30/04/2014 9 LION KING WALT DISNEY STUDIOS 31/05/1997 10 LORD OF THE RINGS TWO TOWERS ROADSHOW 23/08/2003

140 AHEDA 2018 YEARBOOK APPENDIX: DVD AND BLU-RAY SALES CHARTS

GfK Retail Tracking: Top Selling DVD Titles, Life To Date, Ranked by Volume

RANK TITLE DISTRIBUTOR RELEASE DATE 1 FINDING NEMO WALT DISNEY STUDIOS 13/01/2004 2 AVATAR (2009) 20TH CENTURY FOX 29/04/2010 3 FROZEN (2013) WALT DISNEY STUDIOS 30/04/2014 4 CARS WALT DISNEY STUDIOS 25/10/2006 5 LION KING WALT DISNEY STUDIOS 31/05/1997 6 MONSTERS INC WALT DISNEY STUDIOS 30/09/2002 7 RED DOG ROADSHOW 1/12/2011 8 LORD OF THE RINGS TWO TOWERS ROADSHOW 23/08/2003 9 HARRY POTTER & THE CHAMBER OF SECRETS ROADSHOW 11/04/2003 10 LORD OF THE RINGS RETURN OF THE KING ROADSHOW 25/05/2004

GfK Retail Tracking: Top Selling Blu-Ray Titles, Life To Date, Ranked by Volume

RANK TITLE DISTRIBUTOR RELEASE DATE 1 AVATAR (2009) 20TH CENTURY FOX 29/04/2010 2 HOBBIT AN UNEXPECTED JOURNEY ROADSHOW 1/05/2013 3 MARVEL THE AVENGERS WALT DISNEY STUDIOS 29/08/2012 4 STAR WARS EPISODE VII THE FORCE AWAKENS WALT DISNEY STUDIOS 13/04/2016 5 STAR WARS EPISODE I-VI 20TH CENTURY FOX 14/09/2011 6 INCEPTION ROADSHOW 8/12/2010 7 BATMAN THE DARK KNIGHT RISES ROADSHOW 28/11/2012 8 HOBBIT THE DESOLATION OF SMAUG ROADSHOW 16/04/2014 9 TRANSFORMERS DARK OF THE MOON PARAMOUNT 10/11/2011 10 BATMAN THE DARK KNIGHT ROADSHOW 10/12/2008

AHEDA 2018 YEARBOOK 141 142 AHEDA 2018 YEARBOOK AHEDA 2018 YEARBOOK 143 aheda.com.au Level 33, Australia Square 264 George Street Sydney NSW 2000