IDATE’s newest market insight describes the different models of subscription-based video on demand offerings (SVoD): supply-side strategies and description of main players’ services. It lastly analyses the SVoD services developments compared to the pay TV global market.
Spotlighted by the success of services like Netflix and Hulu, SVOD seems poised to compete with traditional VOD offerings, and even position itself as a true rival of pay TV, the audiovisual market’s leading revenue generator. Mainly originating in the United States, SVOD services are starting to gain ground elsewhere, in part through the expansion of the US services (note the growth of Netflix in Latin America and in several European countries), and in part thanks to the reaction of local stakeholders who are structuring their own SVOD offerings in addition to existing stand-alone services.
Although the pay TV operators themselves appear to be highly involved in the development of on-demand services, allowing them to broaden the range of services offered to their subscribers and/or reach out to new audiences, many other players are also positioning themselves in this niche, such as free-to-air TV channels, special-interest TV channels, content producers, DVD and Blu-ray rentals players, and Internet industry players.
These services stand out owing to the size of their catalogues, but also their accessibility closely linked to their role in operators’ strategies.
Current discussions concerning the cord-cutting risk that these SVOD services could induce lead us to wonder about their potential to replace traditional pay TV offerings. But apart from the pricing element (which clearly plays in favour of SVOD services), the type of content offered and its positioning in the media chronology, the modes of accessing the content and these services’ ability to hold copyrights seem to highlight the fragility of these offerings in comparison to those of linear television. Despite the popularity of these SVOD services and the soul searching they are inducing among traditional pay TV industry players, they still account for a very weak share of the market (less than 2 per cent of total pay TV and SVOD revenues). Between now and 2017, even if their market share does increase, it should not exceed 4 per cent of global sales, of which over half will continue to be generated in the United States market. The competition between SVOD and pay TV is undeniable; however, it hinges more on the new players’ ability to induce traditional players to overhaul the sector than on their ability to threaten the sector in the medium term.