Technology | Media | Telecommunications

Thursday, November 24, 2016

Subscription Video on Demand Trends in North America

Blame Netflix, but they're not alone. Subscription Video on Demand (SVOD) services continue to disrupt the traditional video entertainment sector in major markets worldwide. In addition, North America has been a proving ground for innovative new offerings.

According to the findings from a recent study, North America will have 112 million SVOD subscribers -- that's for movie and TV services only; excluding sports -- by end-2016, which is up by 19 million when compared with 2015. Moreover, the SVOD total is forecast to climb to 138 million by 2021.

However, the North America study by Digital TV Research anticipates 117 million TV households in the market by 2021, so the SVOD total will represent 104 percent of all TV households in the region.

SVOD Market Development Trends

"It is important to stress that these SVOD figures are gross – some homes take more than one SVOD platform, especially in the U.S. market," said Simon Murray, principal analyst at Digital TV Research.

The average SVOD subscriber in the U.S. market will pay for about 1.5 services. From the 127 million U.S. total in 2021, the study predicts that 43 million will be 'secondary' SVOD subscriptions.

Or, put it another way, there will be 84 million primary SVOD users in the U.S. market by 2021 – which translates to about 71 percent of the TV households.

Another important point is that their forecasts include Amazon Video – some other forecasts do not. Moreover, Amazon Prime subscribers do not directly pay for Amazon Video.

According to the Digital TV Research assessment, 60 percent of Amazon Prime subscribers watch Amazon Video. For these homes, they have devoted half the Amazon Prime fee to Amazon Video.

North American SVOD Market Outlook

Applying this methodology, the number of U.S. Amazon Video subs will grow from 30 million in 2015 to 49 million by 2021. Amazon Video is expected to start in Canada in 2017. Amazon Video will have 51 million subscribers in North America by 2021, who will generate revenues of about $2.48 billion.

By way of comparison, Netflix is forecast to have 59 million paying SVOD subscribers in North America by 2021 -- that's up from 53 million at the end 2016. The U.S. market will provide 52 million of the 2021 total. Netflix’s North American SVOD revenues will increase from $5.35 billion in 2016 to $6.85 billion in 2021.