Transactional Online Video

Future Viability: Mature

There is still a window for à la carte premium content.

  • Some consumers still purchase and rent movies and TV shows, but the transactional online video model has reached maturity
  • Rentals and personal ownership of TV content and movies is growing slowly and expected to remain profitable

A key risk factor that may limit the growth of this model is the rise of the online video subscription model.

Read time: approx. 3 min

The Fundamentals

Illico, iTunes, Microsoft Movies & TV, Google Play, PlayStation Network, CinemaNow, Cineplex Store, Amazon Instant Video... Transactional online video refers to global and Canadian online service providers that offer on-demand TV and movie content for purchase or rental without a subscription. National companies have developed their own offers online.

A deep content catalogue and a flexible payment model offer users choice and control. Service providers in this model offer both current blockbuster Hollywood movies and a deep catalogue of existing movies, TV series (in their entirety or by episode), TV shows and documentaries. Users pay only for what they watch. The cost to purchase and own content is relatively low for individual units. To build one’s own video library, however, would require more significant investment. The rental model overcomes this cost challenge by offering content for viewing within a specific window of time. Pricing for purchases and rentals is affected by format as well. Ultra HD is typically the most expensive, followed by HD and standard definition.

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Canadian Contribution

No content requirements. This model has no Canadian content promotion requirements; however, a large portion of the revenues from sales is remitted to content creators and owners according to contractual agreements—and thus to any Canadian creators whose work is sold through this model.

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Consumer Profile

On average, Canadians watch 1.25 hours of downloaded movies, TV series and other TV programs per week.1

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Financial

Digital sales and rentals are still growing. The revenue for this model, which comes exclusively from purchases and rentals, is increasing. Total revenues for this market in 2016 reached $393.5 million, representing about a 2.7% share of the TV and video market. Although growth is modest when compared to other digital video offerings, these services are likely profitable. Profitability is determined by sales volume, and sales have been increasing. Increased competition in the digital space remains the biggest threat to this model.

Financial trends for transactional online video

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Source: CRTC estimates (CRTC data collection; Ovum; MTM consumer data)

Note: Splits by language markets are estimated based on MTM data.

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