UK music streaming market could double in size by 202320 November 2019 - Press release
£500m bonus from innovation in services
New services and innovations targeting different music fans more specifically could double the size of the already booming music streaming market in as little as four years to £1.6bn, according to a report by consultants OC&C.
Key to the growth forecast, say OC&C experts, is increasing streaming penetration by creating a range of new services targeting differing customers.
OC&C forecasts that left as is the UK music streaming market would still grow from £829m in 2018 to £1bn-£1.1bn in 2023, a compound annual growth rate of 5%-7%.
However by targeting committed music fans with super-premium and add-on services and by finding ways to tempt current non-subscribers the market could grow to a range of £1.25bn-£1.6bn, a compound annual growth rate of 12%-18%.
OC&C’s 80-page report is based on their analysis of current market data and builds on the consultancy’s expertise advising on subscription models in sectors as varied as mobile telephony, gyms and hotels.
OC&C partner Pedro Sanches said, “Our study indicates the UK music industry has a significant opportunity to increase the size of the market beyond even the most bullish expectations. It is clear that if the industry can come up with tailored offers which deliver value to specific groups of consumers then there’s a major prize at stake.”
The study was commissioned by the Entertainment Retailers Association (ERA).
ERA CEO Kim Bayley said, “We commissioned this report to get an independent sense-check on the growth prospects for streaming. It’s fair to say even we were surprised just how positive the results are. This is a significant piece of work showing how music can embrace the learnings of related leisure markets.
“Rewind 10 years when the music industry was on its knees, few would have believed possible the miracle turnaround streaming services have now achieved. OC&C indicates that further opening the door to innovation is key to music reaching its full potential.”
£500m bonus from new services
Central to the OC&C study is a detailed analysis of the progress of streaming in different demographics (it accounts for 69% of listening time for 16-19 year olds but only 16% of listening time for 45-54 year olds) and what could be done to persuade each group either to trade up from current services or begin to subscribe for the first time.
The report details how businesses in other sectors ranging from mobile phone operators to gyms and video subscription services like Netflix have driven growth by creating a range of services for customer groups with different needs who may also value features differently.
While all-you-can-eat music streaming services have huge success and remain the default option for most, some consumers may be more easily reached with other features, it says.
“The current model dates back to 2008,” said Sanches. “It has enjoyed enormous success in part because of its simplicity but further innovation will deliver more growth.”
OC&C calculates that more innovation in services could result in a potential £500m boost to the market. These range from creating new premium tiers and new entry points to paid streaming to offering the ability to access streaming services without taking out a subscription.