Revenues from SVOD services such as Netflix and Amazon are set to more than double from $14.6 billion this year to $34.6 billion in 2021.
Furthermore, according to a report by Juniper Research entitled Digital TV & Video: Network and OTT Strategies 2016-2021, Netflix now sees US subscriber numbers level with the leading network providers DirecTV and Comcast, at 47 million and 47.7 million respectively.
The report 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 and away from linear, scheduled TV.
It also noted that 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 aiming to offer some linear cable streaming as part of subscription packages in 2017. The concept is to provide ‘skinny bundles’ of content which are smaller packages, offered at a cheaper price via internet delivered services.
Although Netflix undertook a major international expansion at the start of this year, international subscriber growth has lacked pace.
Furthermore, 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.
Commenting on the findings, research author Lauren Foye said: “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 findings of the report included that total TV and video data usage will grow more than five-fold from 2016 to 2021 as uptake of 4k increases download sizes.
Also, combined 4k SVOD and TVOD revenues will grow to account for 13% of total OTT revenues by 2021.