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Uptake of subscription video on demand (SVoD) services delivered over the Internet continues to run hot in Australia with 2.7 million active subscriptions expected by the end of June 2016, representing a growth rate of 46 per cent over the same period in 2015, according to research by technology analyst firm Telsyte.
Telsyte’s Australian SVOD/OTT Video Market Study 2016 found 43 per cent of Australian households now subscribe to either pay-TV or SVoD services, a 4 per cent increase on the previous 12 months. The average number of SVoD subscriptions per subscribing household has increased from 1.5 to 1.7 during the same period.
The total number of paid (excluding trial users) SVoD subscriptions is on track to more than double from 1.9 million in June 2016 to 4.1 million in June 2019, when it will exceed the total number of pay TV subscriptions in Australia. As of June 2016 pay TV has a total of 3.3 million subscribers and will continue to enjoy a healthy revenue lead over SVoD.
Australians’ insatiable appetite for streaming content opens the door for third party players such as Google, Apple, Telstra, Sony, Samsung and others to consider their content service strategies. Telsyte believes the ability to search universally across multiple service providers, including on smartphones and smart TVs, will be a compelling way for people to access SVoD content in the future.
Telsyte research shows that SVoD now takes up 30 per cent of subscriber’s mobile data allowance and mobile SVoD subscribers typically have a 65 per cent larger net data cap than those who do not stream SVoD on mobile.
Telsyte estimates SVoD subscriptions will have grown by almost 900,000 during the twelve months to the end of June 16. Through high conversions from free or trial usage to fee paying subscriptions, SVoD services are also generating around 40 per cent more revenue than twelve months ago.
The paid subscriber market leaders, in order, are: Netflix, Stan and Presto. Together the top three providers represent around 85 per cent of all subscriptions; however, there is a long tail of providers covering sports and special interest niches like NBA basketball, UFC matches and AFL.
Telsyte research shows the local SVoD market has entered a new phase whereby the top three competitors are much more aggressively seeking exclusive content rights deals.
Despite Netflix exploding onto the scene, local players Stan and Presto have been growing faster than Netflix in the past 12 months as appetite for more content drives people to adopt a second or third provider. One in five Netflix customers has more than one SVoD service according to Telsyte research.
Current SVoD subscribers are at the leading edge of display technology with one in four indicating an interest in video content delivered through virtual reality (VR) headsets.
In the living room, SVoD users are twice as likely to own a 4K TV and 20 per cent have already shown interest in streaming 4K content over the nbn (national broadband network).
“New services such as VR and 4K streaming could redefine SVoD services, especially for sports related content and have the potential to lift monthly spend,” advised Foad Fadaghi, Telsyte’s Managing Director.
Telsyte research across industries has shown that consumers are prepared to pay more for entertainment content such as movies, interactive games and streaming sports provided in VR.