While the traditional North American pay-TV industry has yet to respond to market share losses associated with Over-the-Top (OTT) video subscription services, this entertainment phenomenon is now gaining significant momentum in other parts of the world.
Parks Associates announced new international data showing OTT video usage in Western Europe is continuing to expand, with 55 percent of UK broadband households and 51 percent in France watching TV programming and movies online -- that's compared to 70 percent in the U.S. market.
However, the number of paid subscriptions in Europe is significantly lower, where 30 percent of broadband households in the UK and 17 percent in France subscribe to OTT video -- that's compared to 64 percent of U.S. broadband households.
Video Subscription Service Market Development
"OTT is definitely gaining traction across Europe. We are seeing new OTT video services spring up but not as many as in North America," said Brett Sappington, director of research at Parks Associates.
In many parts of Europe, pay-TV penetration is lower than the U.S. market, according to the latest global assessment by Parks analysts, and European consumers have been reluctant to pay for video in the past due to so many free options, such as the BBC iPlayer.
As more pay options enter the market, with large and diverse content libraries, they are slowly changing the culture of video viewing in Europe. Fueled by interest in the iPlayer and popular video services -- from Netflix, Sky, and Amazon -- the U.K. remains one of the top markets in Europe for OTT video services.
New services are emerging in France, including a new transactional video service from well-known retailer FNAC, but Netflix has struggled in the French market, despite partnerships with many of France's leading pay-TV providers.
Growing Demand for Extensive Video Archives
"In the U.S. and Canada, the quickly increasing volume of new options is driving high numbers of online viewing of TV and movies," Sappington said. "Each service is bringing new experiences for consumers, and many are providing new content that is unavailable elsewhere."
AT&T, Sony, and HTC have been the most recent to announce new OTT video services in the U.S. market, and Spotify recently added video to its freemium OTT music service. PlayStation Vue also recently became available nationwide across the U.S. market.
Consumers are trying and subscribing to more subscription services. Parks analysts reported that they saw a big increase in the number of households subscribing to multiple OTT video services in the U.S. market at the end of 2015.