Report: Australians switch to home entertainment while piracy declines

You can blame the price of cinema tickets, the rise of Netflix, the quality of television or just the challenge of going out. But Australians are embracing home entertainment in a big way.

A new report shows that while cinema box office dipped last year, spending on watching films and television programs digitally surged by 55 per cent to match movie-going for the first time with $1.2 billion.

According to the Australian Home Entertainment Distributors Association, the major contributor was the rapid growth of streaming services with spending jumping 93 per cent to $850 million.

The association's annual report said market leader Netflix reached almost 3.6 million subscribers at the end of last year, with Stan and Foxtel Now both reaching 920,000 subscribers.

But Australians also spent more to rent films and television shows digitally on the likes of iTunes, GooglePlay and BigPond Movies (up 7.3 per cent to $158 million) and buy them digitally (up 6.6 per cent to $123 million).

But we continue to drift away from DVDs, Blu-rays and even next-generation Ultra HD Blu-rays. While spending on them was still a surprisingly strong $672 million, it was down 15 per cent in the sixth consecutive decline.

The report shows Australians spent more on digital entertainment than DVDs for the first time last year, following the pattern in the music industry where streaming services have outstripped both CD sales and digital downloads.

"Consumers have sent a clear signal that they're willing to move more digital content into the centre of their personal home entertainment experience," the association's chief executive, Simon Bush, said.

The switch to online viewing comes with more ways of watching content, including catch-up services and niche streaming and rental operations.

"There are new platforms being launched all the time," Bush said. "But cinema consumption is still incredibly important. The films that convert well to home entertainment are the ones that do well theatrically."

While there is an ever-increasing volume of material to watch, the report suggests viewing is fragmenting around the home.

Films and shows are being rented or bought to watch with family and friends, often on weekends, but streaming is a "somewhat more solitary" activity that is "a midweek filler".

An overwhelming 93 per cent of home entertainment spending was on DVDs seven years ago, but it was down to just 38 per cent last year.

With the Disney animation Moana the top-selling title, followed by Rogue One: A Star Wars Story, Trolls and Sing, DVDs are narrowing to the children's market, either to be watched repeatedly or given as gifts.

As a child-minder, Moana is the new Frozen.

The report detects a shift in how we watched at home as well.

While Australians bought 1.8 million TVs last year, a 3 per cent increase with buyers favouring smart TVs with bigger screens, the share of viewing on them has dropped from 63 to 54 per cent in less than three years.

More content is being watched on personal computers and mobile devices, often large-screen smartphones. In fact, younger viewers aged 14 to 24 were watching more on a PC than a TV – often pirated content – and a quarter of their viewing was on a mobile phone or tablet.

Mr Bush said a big drop off in piracy, with usage of major sites down 53 per cent, contributed to the increased spending on home entertainment.

"Australian consumers are flocking to these digital online platforms," he said. "They're the carrots, but we've also seen the stick with site-blocking legislation. Over 100 sites have been blocked in the last 12 months, which makes it harder for people to find piracy websites."

The report will concern cinema executives after ticket sales fell almost 7 per cent to 85 million last year.

So will another report by the Motion Picture Association of America that shows home entertainment has overtaken cinema box office globally.

Worldwide box office hit a record $US40.6 billion ($52.9 billion) last year, up 5 per cent, after growth in China offset a decline in North America.

But home entertainment surged internationally, up 11 per cent to $US47.8 billion.

The report showed there were almost 450 million subscribers to "online video services" around the world, up 33 per cent in just a year.

Despite the tectonic shifts in viewing, there remains a strong interest in watching movies.

Global spending across both cinema and home entertainment was a massive $US88.4 billion, up 7 per cent on the previous year.