Imagine a world where you can stream some of your favorite programmes, documentaries and films at the click of a button – or discover brand new TV shows at your leisure. Hold on a minute, you can…
What initiated SVOD’s growth?
With the emergence of Netflix, Amazon Prime Instant Video, Now TV and many others, consumers have the power to choose their own viewing schedules, without waiting a whole week to enjoy the next installment of the gripping TV series in which they’re wholeheartedly invested.
Although traditional television is still a staple part of home life across Europe, the amount of families opting for SVOD’s which offer a user friendly service for a competitive monthly fee is rapidly on the rise.
Since 2002 when LoveFilm was founded, the SVOD has come a long way. As the SVOD has grown in strength, it has been able to offer what many regular TV services can’t: exclusivity. NetFlix has House of Cards, Daredevil and Better Call Saul, while Amazon Prime offers Bosch and Transparent – and these shows were produced especially for SVOD.
According to Ampere Analysis, subscription VoD services are now consistently outpacing pay TV services in Europe.
Pay TV remains strong across Europe in general, but SVOD services are now growing customer base at a faster rate than their pay TV counterparts. Giants like Netflix, Amazon, Now TV and Maxdome are the key drivers of growth. A recent demonstration of this market dynamics is the acquisition of Dailymotion by Vivendi, a media powerhouse and owner of Canal+ and Universal Music Group. Vivendi have realized how fast is this market evolving, and through this acquisition they quickly expanded in 27 markets.
SVOD stats at a glance
- According to a study by Futuresource Consulting, the digital video market grew a whopping 55% over 2014 to reach over £600 million
- At the end of 2014 there were over 7 million individual subscribers
- By 2019, the number of individual subscribers is predicted to almost double to 13.6 million
Barriers for entry
Although (as shown above), the digital video market is one of Europe’s most thriving industries, many SVOD providers are facing some resistance when trying to break into certain countries, preventing them from monopolising the market.
For instance, although NetFlix has been somewhat of a colossal force in terms of its expansion overseas, it has faced a lot of resistance from France, due to the country’s new anti-piracy laws. These legislations may have a serious affect on the movies NetFlix can offer its consumers; aside from streaming restrictions, there have also been some content disputes based on general cultural acceptance.
Another barrier to entry the SVOD faces, is the cost of content licensing, which can often be incredibly high. As part of the ever-growing OTT market, providers such as NetFlix and Flixfling (for example) face many individual licensing regulations, costs, fees and cultural challenges in terms of the content it can provide the country in which it wishes to offer its services.
Dealing with VAT in Europe, especially since the introduction of the new MOSS rules in January 2015, creates new, tricky challenges for broadcasters selling across borders.
All that said, with the ever-increasing popularity of the SVOD, the pros certainly seems to outweigh the cons and the more developed these services become, the more subscribers they will receive.
One day, the SVOD will become a staple part of everyone’s’ home entertainment diet, which is an exciting prospect to say the least.