GlobalData: SVOD Service Revenue in Japan to Grow to $6B in 2027

Subscription video-on-demand service revenue in Japan is expected to increase at a compound annual growth rate (CAGR) of 10.1% from $3.5 billion in 2022 to $6 billion in 2027, forecasts data and analytics company GlobalData.

The increase will be driven by the strong growth in SVOD subscriptions and unique SVOD households, and a steady rise in the average monthly revenue per unique SVOD household, according to GlobalData.

GlobalData’s latest Japan SVOD forecast reveals that the growth in SVOD subscriptions in the country during 2022-2027 will be supported by the continued rise in household penetration of fixed broadband services, particularly fiber-to-the-home/building (FTTH/B) services, and the subsequent consumer shift from traditional pay-TV services to OTT video platforms.

“The projected rise in the monthly average SVOD revenue per unique SVOD household from $9.29 in 2022 to $12.28 in 2027 is expected to be driven by the increasing consumption of premium video content in the country,” Kantipudi Pradeepthi, telecom analyst at GlobalData, said in a statement.

The Amazon Prime Video platform is set to lead the Japan’s SVOD market and will account for the largest share of SVOD subscriptions through the forecast period followed by Netflix, according to GlobalData.

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“Amazon’s growth can be attributed to its complementary offering of its e-commerce service with the same subscription amount, and competitive pricing,” Pradeepthi said in a statement. “Additionally, the availability of local Japanese content, including licensed anime and American films and television shows, will also help Prime Video maintain its leadership position during the forecast period.”

GlobalData: U.S. SVOD Revenue to Nearly Equal Pay-TV by 2027

The rise of subscription streaming video in the U.S. and the decline of pay-TV are about to intersect. Analysis from London-based GlobalData finds that annual SVOD revenue will nearly equal that of traditional pay-TV by 2027, marking a critical tipping point in the ongoing decline of cable and satellite TV, and the inability of online TV to offset that loss.

GlobalData suggests revenues from SVOD services such as Netflix, Prime Video, Disney+, Max, Paramount+, Peacock and Hulu are forecast to increase from nearly $47.6 billion in 2022 to $64.6 billion in 2027. At the same time, pay-TV revenue will drop from $88.5 billion in 2022 to less than $65 billion.

SVOD household penetration will increase from 260% to 312% due to  households subscribing to multiple streaming services. At the same time, legacy pay-TV U.S. household penetration rate will decline from 47% in 2022 to 33% in 2027.

“SVOD was already on an upward trajectory, but the addition of live sports programming is changing audience viewing habits even more, helping drive additional pay-TV cord-cutting,” Tammy Parker, principal analyst at GlobalData, said in a statement.

Just this month, the National Football League and NBCUniversal announced that the Peacock streaming service will air the first-ever exclusive live streamed NFL postseason game in January 2024, when it presents an NFL Wild Card Playoff.

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Meanwhile, GlobalData suggests there remains a silver lining for pay-TV. The monthly average revenue per subscriber (ARPS) will remain strong, increasing to $118.34 per month in 2027 from $113.49 in 2022, due largely to price increases. By comparison, SVOD providers will see ARPS reaching $12.79 monthly from $12.16 in 2022 — due largely to the increased use of ad-supported tiers, less expensive subscription plans with limited content, and monthly and temporary discounts.

“GlobalData expects Netflix to continue to dominate SVOD revenue market share, attracting about three times as much revenue as Prime Video, and twice as much as Hulu each year through 2027,” Parker said.

GlobalData: Aussie SVOD Revenue to Reach $3.4 Billion by 2027, Driven by Netflix

Australian consumer interest in subscription streaming VOD, or Netflix, continues to grow down under. Overall SVOD revenue is projected to reach $3.4 billion by 2027, an 8.9% annual compound growth rate from $2.2 billion in 2022, according to analysis from GlobalData.

Subscriptions are projected to increase 7.7% per year through 2027 as consumers ditch pay-TV and embrace Netflix — Australia’s largest SVOD service. The Asian-Pacific region added 1.43 million new Netflix subs in the third quarter, ended Sept. 30, giving the streamer 36.23 million paid members and its largest growth market worldwide.

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“A profound library of U.S. originals and English language drama and comedy series, movies, documentaries, and kids shows will help the company maintain its leadership position in the market,” Srikanth Vaidya, telecom analyst at GlobalData, said in a statement.

Meanwhile, Disney+ surpassed Stan to become the second largest SVOD player in terms of subscriptions in 2021, behind Netflix. Unlike most of its competitors, Disney+ has a single pricing plan with all the features available for one price rather than separate pricing tiers.

Stan and other Aussie pay-TV and streaming services continue to embrace live sports as a way to lure and sustain subscribers.

“Sports-related content plays a big role in Australian media. Hence, most operators maintain a sports theme within their SVOD platforms. For instance, Stan has Stan Sports, while Optus has Optus Sport,” Vaidya said.

GlobalData: U.S. and Europe ‘Netflix’d Out’

The U.S. and Europe have become “Netflix’d out,” with the streamer suggested to focus on emerging markets such as India if it wants to halt declining subscriber growth and plummeting share price, according to new data from analytics company GlobalData.

Netflix is expected to spend an estimated $18 billion on content this year, but this will fail to attract new subs unless the streamer recognizes that many of its markets have reached saturation. GlobalData contends that India holds the most market potential, with Netflix penetration in the country expected to increase to 42% in 2026 from 24% in 2021, and streaming subscriptions forecast to reach 191 million by 2026.

Netflix’s [fiscal] results may have come at a surprise to some, as the platform’s content has been strong. However, being a big spender won’t necessarily grow subscriber numbers in the company’s traditional markets,” Francesca Gregory, associate analyst at GlobalData, said in a statement. “Streaming companies’ mantra of ‘content is king’ is no longer guaranteeing ideal subscriptions growth. Netflix will need to refine its emerging economy strategy, which has been seriously lacking.”

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Gregory contends Netflix’s market share in India hovers around 4% compared with 68% for rival Disney+. Indeed, India subs account for more than 35% of Disney+ total subs — a reality helped by Disney’s $71 billion acquisition of 20th Century Fox, whose assets included Indian streaming platform Hotstar.

“If the company wants to spend big, surely it can spare a portion to grow its local Indian content,” Gregory said. “Netflix will need to work hard to address these problems going forward. One way is regionalized content initiatives. In the past, the company has been criticized for confusing its cultural references in its original shows. Further blunders like this will stifle any hope of Netflix reversing its weak position in India.”

New Data Finds Netflix, Disney+ Sentimental Opposites in India

As the subscription streaming video pioneer and first global SVOD service, Netflix dominates throughout much of the Asia-Pacific region, including in countries such as Australia and Malaysia. Yet, Netflix is losing favor in one of the region’s most populated countries, India, with consumer sentiment down year-over-year while sentiment for rival service Disney+ is up through May 2021, according to new information from GlobalData.

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Much of change has to do with the pandemic and interest in the sport of cricket, the latter the country’s national pasttime, whose professional league’s streaming rights are held by Disney streaming subsidiary Hotstar. Disney acquired Hotstar as part of its $71 billion acquisition of select 21th Century Fox entertainment assets.

Hotstar now represents a third (33%) of the 103 million global subscriber footprint of Disney+.

“Despite a year-on-year dip in market share in India during 2020, Netflix’s sentiments were much higher than Disney during the year,” Rinaldo Pereira, senior business fundamentals analyst at GlobalData, said in a statement. “In 2021, the company’s sentiments have dipped and are lower than Disney’s.”

During 2020, Netflix used a free weekend strategy to gain subscriptions in India, and the strategy worked. Yet, Disney gained even more subscribers due to its edge in pricing and local content, i.e. cricket, offerings.

Both Netflix and Disney have recognized the need to address the domestic market by adjusting price points and driving a mobile-centric strategy. Pereira expects further Netflix sub growth in India despite growing competition. At the same time, Disney + Hotstar is likely to remain in the top spot, with net sub additions plateauing in 2022.

Indeed, the company had twice as many mentions on social media compared to Netflix in 2020. Netflix’s India and APAC related social media mentions peaked in 2018 and have been on the downtrend since.

“For Disney and Netflix, geopolitics was among the top themes in [social media] sentences, in line with the Indian government’s new information technology rules in 2021,” Pereira said. “With Indian consumers unlikely to subscribe to every platform, companies with the right price points and the best local content will make the most of [the country’s] booming market.”

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.”