OTT subscription VOD market to $8 billion by 2017

November 11, 2013 | By More

New research says the market for subscription video on demand, driven by increasing consumer demand, will research nearly $8 billion worldwide by 2017.

In its latest report on the market, MRG says the continued adoption of smart TVs, smartphones, tablets and other connected devices, already has pushed the market valuation to $4.7 billion, and said the number of SVOD subscribers exceeds 66 million.

MRG wrote that “consumers are demanding a personalized video viewing experience and a large variety of content to be available on those devices.” Subscription services like Hulu Plus, Netflix and others that allow for multiscreen viewing are “well suited to fulfill these expectations,” MRG said.

OTT VOD

The report (available here) examines the OTT SVOD market including only pure play OTT service providers. MRG excluded TV Everywhere services offered by pay-TV operators.

While SVOD players began their run with libraries chock full of content that often was criticized as being only marginally monetizable. Content owners, however, now see value in reaching segments of the audience, like “cord nevers” who don’t subscribe to pay-TV services, that previously went untapped, or didn’t even exist.

Not only has the quality of content libraries improved significantly as release windows have begun to adjust to address this burgeoning audience — a la CBS and its exclusive same-week deal with Amazon foe “Under the Dome” — but more content providers are looking to SVOD services as potential partners in releasing original content. So, while Netflix is actively pursuing original content deals, content owners increasingly are pursuing Netflix with their own deals for originals.

MRG, meanwhile, says the market’s evolution to include exclusive and original programming could push subscription levels beyond 120 million by 2017. Netflix alone has said it expects to connect with some 60 million subs in the United States in coming years.

MRG said North America is the most developed market for OTT SVOD services, and also among the most competitive with more than 25 OTT SVOD service providers as of 2013.  In the U.S., OTT SVOD subscriptions are estimated to have increased by more than 50% in 2012, reaching nearly 50 million.

Also a fan of SVOD, Western Europe now accounts for 11% of the worldwide OTT SVOD market, including 7 million subscriptions and annual revenue of $575 million.

Asia, with the largest Internet population in the world, accounted for nearly 5 million OTT SVOD subscriptions in 2012 and $255 million in revenue.  While potential for SVOD in this region is enormous, the market is generally very price-sensitive making ad-supported models more attractive in some cases.

In 2012, Eastern Europe comprised 7% of the worldwide OTT SVOD market with more than 4 million subscribers and revenue of US$253 million. Eastern Europe consists of more domestic players as compared to international ones, owing to high demand for home grown content.

The OTT SVOD service markets in Latin America, Asia and Eastern Europe, collectively comprised 20% of worldwide OTT SVOD subscriptions in 2012. These regions are expected to record immense growth in the next five years, increasing their overall share significantly. In 2012, the Middle East and Africa had a negligible share in the worldwide OTT SVOD market. Though the market is expected to grow in the coming years, its contribution to the worldwide OTT SVOD subscriptions will merely increase to 1% by 2017.

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Category: ANALYSIS

Jim ONeill

About the Author ()

Jim O’Neill has been a business journalist since 1992, and has been writing about the digital media industry since 2007. He formerly was the editor of industry journals FierceIPTV and FierceOnlineVideo, and has worked as an industry analyst for international research firm Parks Associates. He currently is CEO and Editor of theConvergence.tv, a newsletter that takes a deeper look at the trends and happenings in the digital media industry, and continues writing research and white papers on a variety of topics in the sector. He can be reached at jim@theconvergence.tv

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