Leading subscription video-on-demand services such as Amazon and Netflix are set to see revenues more than double, reaching almost $35 billion by 2021 according to a study from Juniper Research.
amazon video directJuniper’s report, 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. It forecasts that revenues from SVOD services, such as Netflix and Amazon, are set to more than double from $14.6 billion in 2016, to $34.6 billion in 2021.
Stressing just how much the sector has grown, Juniper notes Netflix now sees US subscriber numbers level with leading network providers DirecTV and Comcast which have 47 million and 47.7 million customers respectively.
The report also forecast that total TV and video data usage will grow more than five-fold from 2016 to 2021, as uptake of 4KTV increases download sizes. The combined 4K SVOD and TVOD — transactional video on demand, such as Pay-per-view and download-to-own — revenues will likely grow to account for 13% of total over-the-top (OTT) revenues by 2021.
Looking to the future, Juniper pointed out that even though SVOD were drawing customers away from traditional providers, networks were now seeking to diversify and adapt through cord-shaving. It also pointed out that while Netflix saw rapid expansion in January 2016, launching in 130 new markets simultaneously bringing its total coverage to 190 countries, international subscriber growth lacks pace. Moreover, it judged recent quarterly results as underwhelming regarding growth prospects for subscriber numbers. Juniper also warned that 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.
“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,” explained Digital TV & Video: Network and OTT Strategies 2016-2021 author Lauren Foye. “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.”
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