LONDON: For the first time ever, UK consumers are expected to spend more this year on video streaming services and film/TV downloads than on buying or renting DVDs, a new study has forecast.

Research firm Strategy Analytics said Britons will spend £1.31bn on streaming and downloading in 2016, a rise of 23.7% since 2015.

At the same time, the amount expected to be spent on DVDs, including Blu-ray, will fall -16.3% year-on-year to £956m, taking expenditure below the £1bn mark for the first time since 1994.

In total, online formats are expected to account for 58% of home video spend, compared to 42% for DVDs, which only last year had market share of 52%.

Popular streaming services, such as Netflix and Amazon Prime, appear to be driving much of this trend and the report found that streaming subscription services account for £1 in every £3 spent on home video.

There are now around 4.6m UK households that subscribe to Netflix and another 2.5m to Amazon Prime, although about 20% of households who subscribe to a video streaming service use at least two.

With video streaming taking off, Strategy Analytics said it expects streaming subscriptions to be the dominant home format from 2017 and will account for more than half of all home video spend by the end of 2021.

Overall, UK consumers are expected to spend £2.27bn on home video in 2016, up 3% since last year and the equivalent of £6.63 per household a month.

In addition, video advertising around streamed and downloaded content is expected to increase 23% to £593m, taking overall revenues for the home video market to £2.86bn.

Commenting on the report, Michael Goodman, digital media director at Strategy Analytics, questioned whether it would be viable for retailers to offer physical discs in five years' time.

"Five years ago, DVDs represented 86% of consumer spend on home video, in five years it will be less than 14%, with DVD/Blu-ray rental virtually extinct," he said.

"As online provides increasing ways to access films and box-sets, physical simply can't compete."

Data sourced from Strategy Analytics; additional content by Warc staff