Benedicte Guichard| Wed Aug 17 2016 CET| Industry insights
SVOD is stronger than ever and we can expect exciting things from this year and beyond. With the streaming devices boom and the popularity of the major SVOD services like Netflix and Hulu, the US market seems like the turmoil of all the developments.
To put it into perspective – according to research – SVOD will contribute to 40% of total OTT revenues in 2021, some US$25.71 billion. Also, studies from Digital TV Research shows that there will be up to 383 million SVOD subscriptions by 2021, up from 163 million by the end of 2015 and 21 million back in 2010.
Even though SVOD is pretty hot in Europe, you may be surprised to know (or maybe not), in which extent SVOD growth is concentrated on US soil.
In fact, according to Parks Associates, around 55% of OTT services in The States have a subscription-only business model much like Netflix. Basically, more than half of US OTT subscribers are SVOD. That’s pretty colossal, to say the least.
It seems that SVOD subscribers are growing at a rate exponentially faster than the likes of fixed broadband and pay-TV households, as the chart shows.
Speaking of revenues, Strategy Analytics projects that OTT video revenue will surpass $30 billion by 2020, up from $19.45 billion in 2016, with steady double digital growth. This increase is mainly driven by SVOD and advertising.
As subscription streaming video options expand, consumers are becoming less likely to rent digital video. Digital video rental (TVOD), never all that popular with consumers, is expected to continue to decline to less than 5% of total OTT revenue.
Due to the astonishing – and ever-rising – success of SVOD in the USA, many of the big pay-TV channels are hedging their bets and migrating to the OTT arena.
Recently, premium cable network Starz announced that it has developed an OTT streaming service in the US, showing programmes such as Power and Outlander for $8.99 a month.
Time Warner also announced its agreement to buy a 10 percent stake in SVOD Hulu, in a bid to leverage its lineup of television and film content on a number of viewing platforms. A real indication of the potency of SVOD in the US.
Despite the soaring success of SVOD, it does seem that the niche SVOD services will need help from OTT giants to ensure long-term success – and may even end up as standalone apps as part of a much bigger, all encompassing over-the-top service.
A study from Parrot Analytics suggests that by teaming up with a more popular OTT service, the niche SVOD providers stand to improve the size of their target audience, therefore, increasing the chance that their content will fall into the laps of the right people.
It is plain to see the OTT and SVOD industry is an ever-evolving beast that is gaining more commercial power each and every day.
SVOD is becoming huge in America, but its popularity in Europe and elsewhere around the globe will soon catch up. There is a long, exciting and incredibly bright future for SVOD and whether you’re a consumer or a provider, by keeping up with the latest developments, you stand to reap rewards beyond your wildest imagination.
Find out why big publishers opt for Subscription VOD, instead of ad-based models: