Status of Physical Media - Media-tech association€¦ · Digitization and Market development of Optical Discs Audio Digital recorded music will increase by 11,8% p.a. as physical

„Sustainability versus Temporality“

MediaTech 2018 – Eindhoven – June 05, 2018

Sven Deutschmann - Sonopress

Status of Physical Media

2 MediaTech – Eindhoven June 05, 2018 Sonopress | Sven Deutschmann

Introduction: Digitization changes the business

Global data traffic with

phenomenal growth rates


Introduction: Digitization changes the business

Global data traffic with

phenomenal growth rates

Between 2012 and 2016: Data

traffic has doubled and …

Until 2021 expected to be three

times as much as in 2016

Dominate internet traffic regions in

North America/ US and China

Each minute 150 million emails

are sent plus 20 million messages

via What’s App (2016)

Each minute > 38.000 hours of

Music are streamed (2016)

Smartphones will account for the

most data traffic in 2021

Smartphones, Tablets and other

portable devices will account for

65% of all data traffic in 2021


Digitization and Market development of Optical Discs

Audio

Digital recorded music will

increase by 11,8% p.a. as

physical recorded music

declines by 11,6% p.a.

Turning point in 2015

Video

Global internet video revenues

have surpassed physical home

video in 2016 and extend its lead


Games

Traditional gaming revenues on

Hardware Consoles (2012: 49%)

surpassed by digital and online

MMOG microtransactions (DLC)



Digitization in Audio & Video: Massive success story for streaming services in the U.S.

Audio

On demand streams with a

continued success story

Video

Home Entertainment will follow

this path and shows significant

growth rates

Outlook

Total consumption is growing and

provides promising future


Audio

Digital streaming services are

experiencing a more balanced

revenue flow all through the year

CD & Vinyl

Peak season effect in Q4

Outlook

Complimentary pattern of digital

streaming and physical media for

Media enthusiastic’s and fans

Physical media with Q4 peak versus digital streaming more balanced through the year


Physical media Audio & Video: CD albums down while Vinyl slightly up in the U.S.

Audio

Overall decline of physical sales

in the U.S. by minus 16,5%

Vinyl

Up by 9% in the U.S. though in

total units the growth is at 1,2 M

units Vinyl in the U.S.

Outlook

Physical media still contribute a

major share of the total business

though the significance of the

business is continuously fading


Continued decline for Optical Discs – Home Entertainment Video

Development of Optical Discs

At the example given for the

German Home Entertainment

market the development follows

the same pattern

Further decline of DVD as well as

BD

Even new formats like Ultra HD

cannot stop the decline of the BD

format going forward


Market developments Optical Discs

Optical Discs at decline path

Global peak for optical data

carriers was reached in 2006:

Annual volume of replicated discs

> 18.000.000.000 (18bn discs)

Plateau phase duration for only

about two years

Volume 2017: < 6.000.000.000

U.S.

Market decline started earlier

Asia

Extreme decline rates

Europe

Relatively robust until 2010/2011;

but then followed by accelerating

decline rates year on year


Continued decline of Optical Discs

Development of Optical Discs

The decline hasn‘t stopped but

even accelerated in the recent

years and will continue

Global forecast 2018 :

CD minus 21%

DVD minus 18%

BD minus 9%

(incl. UHD, Xbox, PS)

European forecast 2018 :

CD minus 13%

DVD minus 25%

BD minus 10%

(incl. UHD, Xbox, PS)


Continued market consolidation - Europe

Recent market consolidation

Big players in Europe struggle

EDC was the exclusive / preferred

manufacturer for Universal Music

for more than a decade. Market

exit in 02/ 2017

Cinram once was biggest

replicator globally; lost its U.S.

presence in Q4/ 2015

Cinram Europe had its best fiscal

year in 2016 (according to press

reports). Though, replication was

closed down entirely in 08/ 2017


Continued market consolidation – North America / U.S.

Recent market consolidation

Sony DADC in the U.S. under

pressure of market development

Announcement in January 2018

about partly closure

Getting out of replication of CDs

and DVDs in 1st HY 2018

Major change in the North

American replication landscape


Presence of Physical Media in Retail is fading

Best Buy hits “EJECT” button

In January 2018 “Best Buy”

announces a staggered approach

by exiting their presence at CD in

retail in the U.S.

From 1st July 2018 onwards CDs

to be taken out of the sortiment

Vinyl to follow at a later point in

time


Conclusion Optical Disc – The Cake is getting smaller

2006 2016 2020

18 Billion 6 Billion 3 Billion

10

0 %

33

%

In 10 years: minus 66 % In 4 years: minus another 50 %

16

%


Conclusion

• Physical Media in comparison to digital streaming will continue to decline

• The volumes of Optical discs will decrease by approx. 50% in the next 3-4 years

• The success story of Vinyl demonstrates the value of Physical media as such

• Physical media have a component of „sustainability“ while digital streaming has more

the character of „temporality“

MediaTech Association supports the value proposition of Physical Media – regardless of

the carrier: MusicCassettes, Vinyl, CD, DVD, BD, Pure Audio and UltraHD BD

Status Physical Media

Thank you

Documents

Status of Physical Media - Media-tech association€¦ · Digitization and Market development of Optical Discs Audio Digital recorded music will increase by 11,8% p.a. as physical