Reaching almost $35 billion by 2021 as accessing video on demand via smartphone and tablet gains ever-more traction
Revenues from subscription video on demand (SVoD) services, such as Netflix and Amazon, are set to more than double from $14.6 billion this year, to $34.6 billion in 2021.
Netflix is already seeing its US subscriber numbers level with leading network providers DirecTV and Comcast (with 47 million and 47.7 million respectively), according to Juniper Research.
Juniper’s latest research found that SVoD providers can expect to see substantial returns on their expansion and growth strategies, as more countries and markets move to this method of video consumption, in a continual move away from linear, scheduled TV.
While SVoD, which gives users access to TV services on mobile devices as well as connected TVs, continues to draw customers away from traditional providers, networks are now seeking to diversify and adapt through ‘cord shaving’, with services such as YouTube and Hulu seeking to offer some linear cable streaming as part of subscription packages in 2017. The concept is to offer ‘skinny bundles’ of content which are smaller packages, offered at a cheaper price via internet delivered services.
Netflix saw rapid expansion in January 2016, launching in 130 new markets simultaneously, bringing its total coverage to 190 countries, yet international subscriber growth lacks pace, as evidenced in its recent quarterly results. Netflix’s expansion has resulted in price increases, but the beneficiaries may ultimately be the provider’s rivals if the competitor price differential becomes too great, commented Juniper.
Research author Lauren Foye explained: “Whilst Netflix has expanded its coverage globally, the test will be whether it can meet its original content production costs, as well as provide quality content to consumers. It is believed that US rival Hulu is now close to offering the same amount of content as Netflix, and others are pushing new models- such as Amazon’s monthly subscriptions to Prime video, and YouTube Red subscriptions for exclusive content.”
The research also showed that total TV and video data usage will grow more than five-fold from 2016 to 2021, as uptake of 4K increases download sizes.
Combined 4K SVoD and transactional video on demand (TVoD), ie, pay per view and download to own, revenues will grow to account for 13% of total over the top ( OTT) revenues by 2021.