April 18, 2019
A new report from Futuresource Consulting found that mainstream adoption of subscription streaming video continues to grow worldwide — reaching 60% of households in North America, 26% in Western Europe, 21% in Asia-Pacific and 19% in LATAM.
“SVOD has come of age, with consumer spend exceeding $29 billion last year, up 38% on 2017,” principal analyst David Sidebottom said in a statement.
The analyst cited improving broadband quality, smart TV penetration, availability of services and perceived consumer value.
Netflix and Amazon Prime Video accounted for 33% of all subscriptions globally in 2018 — but almost 66% total consumer spending on SVOD.
Disney’s acquisition of Fox, along with the completion of AT&T’s acquisition of Time Warner and pending OTT platform bow from WarnerMedia will further shape the SVOD landscape in the U.S. and, in the longer term, worldwide, according to London-based Futuresource.
“Consumers are seeking a combination of functionality, high-quality original content and low price,” says Sidebottom. “Netflix has demonstrated continued growth in both its primary markets of the U.S. and U.K., as well as France and Germany. Plus, Netflix has many options for turning profit, each requiring a local market-specific strategy, based on maturity of infrastructure, device usage, access to local content, GDP and market share.”
Indeed, the report contends competitors to Netflix continue to underperform, with complementary services standing better odds of success.
Futuresource said exclusive, relevant and local content, particularly outside the U.S., is requisite to capturing and holding audience appeal.
While the uptake of multiple OTT services will continue to drive overall subscription numbers, the market will be limited to a small number of clearly differentiated and complementary services. This makes a carefully defined market and content strategy even more crucial, according to the report.
“Consumers face an increasingly confusing video landscape,” Sidebottom said.
He said Amazon Channels and pending Apple TV+ are both well-placed to succeed in the increasingly fragmented world of aggregation, but both currently lack “ubiquity of content” internationally.
“This new breed of ‘super aggregators’ will become an important component in the battle for the living room TV, though, in many instances, they have yet to fully realize the three consumer requirements, including quality, original content and price,” Sidebottom said.