Netflix & Co. will soon make more money than movie theaters

Do you prefer a night in with Netflix (S NFLX) over paying $8 for popcorn at the theater? You’re not alone: Box office revenue has been flat over the past few years while online video revenue has grown dramatically, and this is starting to change how Hollywood makes its money.

The new PricewaterhouseCoopers (PwC) Entertainment and Media Outlook 2014-2018 report shows that revenue from online video services is set to overtake box office revenue in 2018. The report actually predicts that box office sales are going to slightly grow this year to $11.4 billion, up from $10.8 billion in 2013, and after being more or less flat since 2009. PwC predicts that box office revenue will keep an annual growth rate of 3.1 percent in the coming years, which means that people will spend $12.5 billion on movie tickets in 2018.

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Data courtesy of PricewaterhouseCoopers.

But revenue from subscription video services like Netflix in particular is growing at a much faster rate, from $3.3 billion in 2013 to a projected $10 billion in 2018. Add transactional video services like iTunes and Google Play, where you pay to rent or buy a digital copy of a movie or TV show, and you arrive at a total of $14 billion in revenue in 2018.

This growth is offsetting the declines Hollywood is seeing with physical media. PwC is predicting that the revenue from rentals and sales of DVDs and Blu-ray discs will decline from $12.2 billion in 2013 to $8.7 billion in 2018.