Los Angeles, CA (PRWEB) January 03, 2013
The Movie and Video Distribution industry has suffered due to digital technology, which enable production companies to distribute content with relatively low initial costs. According to IBISWorld industry analyst Agata Kaczanowska, “major studios have distributed more movie content themselves during the past five years, as opposed to outsourcing to industry firms because of these technological advancements.” Consequently, industry revenue has declined 2.6% per year on average during the five years to 2012. During this time of waning demand for movie production, the industry has increased its reliance on existing libraries of content and independent productions to support revenue.
New technologies that allow consumers to indefinitely store and access digital content have become increasingly popular due to their provided convenience and the wider selection of content they facilitate. Such technology has the potential to boost consumption of movie content because it does not allow users to rent or share it. However, it also encourages distributor bypass by allowing producers to provide content directly to consumers. This self-distribution by movie studios heightens the competition for distribution firms. As this trend becomes more pronounced over the next five years, the number of industry enterprises is expected decrease over the next five years. Currently, the Movie and Video Distribution industry is highly fragmented, with a large number of small companies operating in niche or local markets. However, “within this environment of weakening demand, distributors will increasingly consolidate their operations in an attempt to broaden their value-added service offerings and increase their market shares,” says Kaczanowska. Illustrating this trend, RLJ Entertainment acquired Acorn Media Group and Image Entertainment in 2012 to become a major company in the industry and appeal to more markets.
In 2012, growing consumer demand for movie and TV entertainment due to increased income will lead production companies to generate more content, which will likely result in some outsourcing to the Movie and Video Distribution industry and assist in modest revenue growth over the year. Meanwhile, cinemas are expected to continue transitioning to digital distribution in 2012 and beyond since major theaters already have contracts to install projectors and systems compatible with digital formats. This trend toward digitalization, although a potential threat, will cut time and costs for distribution companies, helping boost the industry’s average profit margin. Industry revenue is expected to grow as well, but will remain subdued as external competitors continue to siphon revenue away from industry operators. For more information, visit IBISWorld’s Movie & Video Distribution in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes establishments that are primarily engaged in marketing and circulating audiovisual works to cinemas, TV networks, other exhibitors and stores. The industry excludes movie and TV distributors that are also involved in audiovisual content production, as well as retailers, rental stores and merchant wholesalers that distribute prerecorded physical media and music distributors.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.