December 17, 2020
As consumers worldwide increasingly move toward over-the-top video distribution, new data from Futuresource Consulting finds that linear pay-TV still dominated consumer spending at 58% ($100 million) of the global home entertainment market in 2020. The London-based firm said overall spending reached $172 billion, which included pay-TV, SVOD, TVOD, electronic sellthrough, DVD and Blu-ray Disc. SVOD spending reached $55 billion, with Netflix capturing about 50% of all global subscription revenue. In 2019, SVOD revenue totaled about $36 billion.
“The sector is exhibiting phenomenal growth and driving overall growth of home video spending, with key services able to cultivate a large, well-rounded content offering that appeals to many consumers,” analyst Tristan Veale told the Society of Motion Picture and Television Engineers. “Combine this with the convenience of being able to pick up where you left off, no matter what device you decide to continue watching on, and it’s inevitable that SVOD will continue to power the growth curve. By 2024, we expect over a third of home entertainment spend will be on SVOD.”
At the same time, transactional video, which includes packaged media, continues to slow with global spend reaching $17 billion in 2020
Veale contends that the market continues to favor of VOD, including SVOD and AVOD — driven by younger viewers. The older demographics still spend the majority of their time watching linear TV. The analyst said that while multiple services can co-exist, with consumers stacking services, a deeper integration is required with distribution platforms at a metadata level, as consumers continue down the multiservice route.
Futuresource suggests pay-TV and SVOD can co-exist via partnerships and mergers as both channels embrace digital distribution. While SVOD services have developed a business model targeting on-demand consumers, the platforms are increasingly pursuing live-sports deals, especially in Europe with soccer.
“SVOD services … are experimenting with scheduling and acquiring sports rights — two key pillars of the pay-TV industry,” Veale said. “The burning question is whether younger age groups will adopt the habits of their parents and grandparents as they grow older, or will their current video behaviors remain with them as they age?”