U.K. SVOD Market to Double Subs in Five Years

It’s a SVOD market in the United Kingdom — regardless of the coronavirus pandemic. New research from GlobalData contends growth in subscription video-on-demand is set to double over the next five years. The total number of SVOD subscriptions is expected to increase from 22.4 million to 44.6 million. Total market revenue is projected to also double to £3 billion ($3.6 billion) in 2024 from £1.5 billion ($1.8 billion) last year.

While the London-based research firm agrees there will be some positive impact on SVOD adoption from COVID-19, it expects this to be outweighed by a combination of lockdown-driven adoption and consumer take-up of new services such as Disney+, Apple TV+, Acorn TV and BritBox, among others.

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“Prior to COVID-19, the SVOD market in the U.K. was experiencing a high rate of growth, with no sign of plateauing,” Joel Cooper, senior director, telecoms market data and intelligence, said in a statement.

The U.K. market has traditionally been dominated by Netflix and Amazon Prime Video, with Comcast-owned Sky’s Now TV in third place. GlobalData now believes Disney+’s impact is expected to be particularly pronounced given its brand power, breadth of premium content and low price.

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In the U.S., Disney+ acquired about 25 million paying subscribers just two months after launching in November 2019, equivalent to around 10% SVOD subscriber market share.

“SVOD in the U.K. is a long way from saturation point,” Cooper said. “The market represents a clear opportunity for existing players as well as potential new entrants.”

Disney Streaming Services Top 90 Million Subs

Lost in The Walt Disney Company’s subdued financials was the fact its upstart branded subscription streaming services — Disney+, Hulu and ESPN+ — are catching on with consumers.

The three services collectively exceeded 90 million subscribers in the second quarter (ended March 28), up from 63.5 million in Q1, putting them in the ballpark with Amazon Prime Video’s 100+ million Prime members — and about halfway up the ladder to industry pioneer Netflix.

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The surge in OTT video revenue — upwards of $4.1 billion — ballooned costs as well, surpassing $812 million in the quarter, from $385 million in the previous-year period. Disney’s direct-to-consumer and international segment topped studio operations in revenue, and finished the period within 25% of parks, experiences and products.

“Disney’s streaming empire is beginning to compete with the likes of Netflix,” Danyaal Rashid, thematic analyst at GlobalData, said in a statement.

But with ongoing uncertainty about when its studio business will re-start, London-based GlobalData re-positioned Disney’s place in its “Music, Film and TV Thematic Rankings” from seventh to 10th — below all of its major streaming competitors from both the West and Asia, including Netflix (1st), Amazon (2nd), iQiyi (3rd) and Tencent (4th).

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Rashid said Disney will weather the storm until a time comes when it can re-gain its physical assets — underscored by a SVOD empire.

“There is not a lot that Disney can do at the moment but keep up its strong presence in the streaming market and wait for the effects of COVID-19 to lessen so that it can re-open its parks,” Rashid said.

Analyst: Coronavirus Pandemic Could Hurt Disc Sales

On the heels of Netflix adding nearly 16 million subscribers in 90 days and increased transactional VOD sales, consumer migration toward digital distribution during the coronavirus pandemic is undisputed.

New data from London-based GlobalData suggests shutdowns in the economy worldwide, including many retailers, has undermined sales of packaged media, including DVD and Blu-ray Disc as consumers question discretionary spending on home entertainment.

“It is clear streaming services are becoming integral to consumers’ lives and the numerous lockdowns across the world are encouraging people to spend more time in front of the TV or on a laptop,” analyst Zoë Mills said in a statement.

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Mills said increased streaming video could have a detrimental impact on the sales of DVDs for retailers not only during the lockdown but after as well as consumers are tied to these subscriptions and have less of a reason to purchase a physical movie.

Specifically, Mills said the home video market would be undermined by the lack of new releases driven by pushbacks and delays of theatrical titles by studios. The analyst cited the newest James Bond movie with Daniel Craig, No Time to Die, which saw its theatrical release delayed from April to November — if not longer. The postponement means the packaged-media release won’t happen until 2021.

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“Previous James Bond releases have offered a boost in retail sales and while this will instead be felt in 2021, for retailers already in trouble, with no notable releases this year, 2021 may be too far away,” Mills said.

Analyst: Netflix, YouTube Bandwidth Throttling Not Enough to Prevent Network Overload in Europe

The agreement of video streaming giants Netflix and YouTube to reduce streaming quality in Europe over the coronavirus crisis is not enough to prevent network overload, according to a director at data analytics company GlobalData.

Gaming services must also pitch in.

“Netflix and Alphabet have demonstrated superb industry leadership with this compromise and gesture, but online gaming service providers must now follow suit,” Emma Mohr-McClune, tech service director at GlobalData, said in a statement.Although video streaming represents the lion’s share of residential Internet traffic in Europe, interactive online gaming is a substantially greater threat in network overload terms. Any mass market spike in activity will have significant consequences for vital government and functions for markets in COVID-19 lockdown mode.”

Modeling impending network use during the crisis is uncharted territory, she noted.

“We are anticipating significant network challenges as millions of families spend the next foreseeable weeks in lock-down mode,” she said in a statement. “Problematically, there is no forecast template for the situation in which we find ourselves today. The quantitative industry has always reckoned with network traffic management scenarios with standard peak/off-peak times based on the standard movement and school-attendance time profile of the average online gamer. The COVID-19 lock-down will throw all that to the wall.

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“All European telcos are now putting capacity boost and traffic management processes into place, as a response to the ongoing crisis, but their efforts will be hampered without an honest dialogue between OTTs, state bodies and the network services industry.

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“At the same time, consumers must heed the call of their service providers to exercise responsible usage of the Internet. Staying at home will be particularly taxing on the discipline and patience of millennials and the digital native generation. However, exactly this generation need to show their solidarity in terms of restraint.”