May 19, 2020
As expected, the coronavirus lockdown has jumpstarted consumer adoption of over-the-top video services such as Netflix, Disney+, Hulu and Amazon Prime Video.
New data from Rethink Technology Research (RTR) finds that COVID-19 lockdowns generated a 8.9% boost to the SVOD market, which he says will reach $72.3 billion in revenue and 775.8 million subscribers by 2025.
“When measured against our historic projections, we believe that the lockdowns will result in an 8.7% increase in subscriptions, and a 7.9% increase in revenue in 2020,” the research group wrote in a note.
As Netflix’s first-quarter results revealed, the worldwide SVOD market is expected to be positively impacted by the COVID-19, as consumers turn to SVOD services to fill increased viewing hours. As a result, the launch of Disney+ could not have come at “a more opportune time,” despite the virus’ negative impact on the rest of Disney’s business units.
Disney+ is projected to pass Prime Video and further narrow the gap with Netflix by 2025. RTR contends SVOD remains the “nail in the coffin” for traditional pay-TV.
“It is hard to see how viewers with two or more SVOD services can ever return to the conventional pay-TV model,” read the note. “The three streaming providers have … the biggest opportunity to rip market share from the pay TV market … and their projected success means they will fundamentally alter the viewing habits of hundreds of millions of households.”
RTR believes once kids are locked into a SVOD library such as Disney’s, parents will be reluctant to cancel the service and others.
“When the subscription prices are this low, SVOD services become very sticky offerings,” read the report.