Analyst: Netflix, Amazon revenues to more than double
September 19, 2016
Data from Juniper Research has found that revenues from SVoD services, such as Netflix and Amazon, are set to more than double from $14.6 billion (€13bn) this year, to $34.6 billion in 2021. Netflix now sees US subscriber numbers level with leading network providers DirecTV and Comcast (47 million and 47.7 million respectively).
Juniper’s research, Digital TV & Video: Network and OTT Strategies 2016-2021, found that SVoD providers can expect to see substantial returns on their expansion and growth strategies, as more countries and markets move to this method of video consumption, in a continual move away from linear, scheduled TV.
Whilst SVoD continues to draw customers away from traditional providers, networks are now seeking to diversify and adapt through ‘cord shaving’, with services such as YouTube and Hulu seeking to offer some linear cable streaming as part of subscription packages in 2017. The concept is to offer ‘skinny bundles’ of content which are smaller packages, offered at a cheaper price via Internet delivered services.
Netflix saw rapid expansion in January 2016, launching in 130 new markets simultaneously, bringing its total coverage to 190 countries, yet international subscriber growth lacks pace. As quarterly results suggested underwhelming growth prospects for subscriber numbers.
Netflix’s expansion has resulted in price increases, but the beneficiaries may ultimately be the provider’s rivals if the competitor price differential becomes too great.
Research author Lauren Foye explained: “Whilst Netflix has expanded its coverage globally, the test will be whether it can meet its original content production costs, as well as provide quality content to consumers. It is believed that US rival Hulu is now close to offering the same amount of content as Netflix, and others are pushing new models, such as Amazon’s monthly subscriptions to Prime video, and YouTube Red subscriptions for exclusive content.”
Other Key Findings Include:
- Total TV and video data usage will grow more than five-fold from 2016 to 2021, as uptake of 4K increases download sizes.
- Combined 4K SVoD and TVoD (Transactional Video on Demand, i.e. Pay per View and Download to Own) revenues will grow to account for 13 per cent of total OTT revenues by 2021.