Report: SVOD Revenue to Top $36 Billion in 2018

Revenue from subscription streaming video services such as Netflix and other over-the-top video services is projected to top $35 billion this year — up nearly 30% from revenue of $25.04 billion in 2017, according to new data from Digital TV Research.

Spearheaded by Netflix, Prime Video and Hulu, SVOD revenue in the United States will surpass $16.7 billion, followed by China ($3.7 billion), the United Kingdom ($1.7 billion), Japan ($1.09 billion) and Germany ($1.03 billion). Other countries account for a combined $10.7 billion.

“No surprises that the U.S. is the top earning [SVOD] country,” Simon Murray, principal analyst at London-based Digital TV Research, said in a statement.

Murray, however, cautions that the U.S. is losing its market prowess in SVOD as Netflix and other services expand globally – triggering increased third-party competitors.

“The U.S. contributed to 56% of the global revenue in 2015, but this proportion will fall to 48% in 2018,” he said. “Despite this, the U.S. will add more than $10 billion in revenue over this period.”

Digital TV Research said it projects 474 million SVOD subscribers by the end of the year globally – up 108 million from 2017 and 304 million at the end of 2015.

 

 

Households Upping SVOD Services

NEWS ANALYSIS – One of the hallmarks of over-the-top video has been the distribution channel’s ability to offer myriad programming at loss-leader pricing.

Thus, it’s little surprise the average broadband home in the United States subscribes to 2.8 OTT services – spearheaded by Netflix, Amazon Prime Video and Hulu – according to new data from Ampere Analysis. The global average is two SVOD services per household.

Through the first quarter of the year, monthly domestic household SVOD spending reached $35 – more than double the $15.60 spent in the previous-year period.

With Netflix and Prime Video driving global SVOD growth, monthly household SVOD spending the United Kingdom reached $18.70 compared to $10.40 last year.

“Netflix and Amazon have acted as catalysts for SVOD stacking, particularly in those European markets where they have seized the initiative through low cost subscriptions,” Toby Holleran, senior analyst at Ampere Analysis, said in a statement.

Indeed, French and Spanish households now average 1.5 and two SVOD services per household, respectively, despite the recent exit of CanalPlay from the French market.

“While some European countries have been slower to adopt SVOD, the American giants are now part of the package in virtually every SVOD household,” said Holleran. “This is particularly notable in Holland, where nearly three in four SVOD households take only Netflix.”

Ampere contends that while OTT video continues to rise in popularity, demand for traditional pay-TV remains relatively strong in some countries. Household SVOD penetration in the U.K. increased 4%, while pay-TV adoption remained unchanged.

Indeed, in Poland where pay-TV is relatively inexpensive, OTT video continues to struggle gaining traction among consumers.

“Although in some cases a growing number of SVOD subscriptions is leading to a decline in pay-TV, that is certainly not always the case,” said Tony Maroulis, research manager at Ampere. “Heavy stackers are most likely to have pay-TV services. Clearly, there’s a healthy appetite amongst consumers worldwide for quality content across a range of paid-for platforms.”

 

Discovery Channel Looking to Bow Netflix/Amazon Prime Video Competitor in Germany

With Netflix and Amazon Prime Video carving up much of the burgeoning over-the-top video ecosystem globally among themselves, Discovery Inc. June 25 announced it is partnering with German pay-TV service ProSiebenSat.1 to launch a branded online service in the country.

Despite being Europe’s No. 1 economy, Germany (and France) has been slow to adopt OTT video, including subscription VOD. That trend is changing. SVOD revenue in Germany is projected to reach $664 million this year; $763 million by 2022 – with user penetration topping 12%.

Discovery (whose properties include Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Travel Channel, Turbo/Velocity, Animal Planet, and Science Channel, as well as OWN: Oprah Winfrey Network in the U.S., Discovery Kids in Latin America, and Eurosport)and ProSieben say their OTT service (launching in 2019) will be “pioneering,” offering ad-supported and SVOD platforms featuring local and Hollywood content – and live sports.

With a goal of 10 million subscribers in the first two years, the service will employ 200 people and hopes to include major German TV broadcasters RTL, ARD and ZDF as well.

“This is an exciting next step in our strategy of reaching more viewers on more screens as the global leader in real life entertainment and international sports,” Discovery CEO David Zaslav said in a statement. “Together with ProSiebenSat.1, we are building a world class streaming service to nourish super fans in one of our most important international markets, while also creating a new model for the future for viewers to enjoy their favorite content.”

Since 2017, ProSiebenSat.1 and Discovery have offered joint content via online platform 7TV, both as live streams and through extensive media libraries.

Also included in the new service will be Maxdome (founded in 2006), one of the largest on-demand video stores in Germany with more than 50,000 titles. The platform offers a wide variety of feature films, series, comedy shows, sports, music and cartoons – with exclusive titles and series such as the latest season of “Grey’s Anatomy,” and moviesStar Trek – Into Darkness and Mission: Impossible – Rogue Nation, among others. 

“All our efforts are focused on understanding what viewers want and building the best, most user-friendly product for German audiences,” said Alexandar Vassilev, CEO of 7TV.“We have a fast-growing team with experts from around the world and can’t wait to show our platform and services in the first half 2019.”

Discovery’s move into SVOD in Germany comes as Sony Pictures Television is entering the Dutch OTT video market for the first time.

The studio is launching Film1, a SVOD service featuring 300 movies, including Blade Runner 2049Spider-Man: Homecoming, and Baby Driver, among others.

“We take pride in securing the latest and best film content for our Dutch audience, and this new direct to your screen service complements our partnerships with pay-TV operators and delivers a new way for people to access our top-quality content,” Kate Marsh, EVP, Western Europe, International Networks at Sony Pictures Television, said in a statement.