After its extremely successful development in North America, Netflix has made efforts to try and spread the same enthusiasm for its subscription-based video streaming services across Europe since early 2012.
The European market for subscription-based video-on-demand services (SVOD) appears to be on the upswing. However, when taking a closer look at the phenomenon, the triumph of VOD subscriptions does not extend to other countries in quite the same way, reports German research company Statista in its digital market outlook The European Video Streaming Challenge.
In North America, roughly 67 million consumers are subscribed to paid video streaming services, generating revenues of around €3.8 billion in 2015. So far, Netflix is the uncontested market leader with 71% (USA) and 68% (Canada) of all SVOD users subscribing to its services.
In Europe, there are three major markets for VOD subscriptions and roughly 12 million paying users. Here, Netflix has already won over 40% of German, 37% of French and an impressive 80% of all SVOD users in the UK.
While projections suggest that in America and Canada roughly 30% of the population will be subscribed to a paid streaming service in 2020, Statista forecasts expect to see the first signs of market saturation in Germany and France three years from now. Roughly 10% of the German population will be subscribed to paid SVOD services by then.
Primary reasons for the lack of willingness to pay are national mandatory licence fees for the public broadcasters on the one hand and a general reluctance when it comes to paid digital subscription models on the other.
The United Kingdom is the exception. Nevertheless, success rates of streaming services in Europe will not compare to those in North America in the long run, according to the report.
Even though the market penetration of streaming services in Europe is significantly lower than in North America, growing revenues per user still point towards intensive usage and an increase in customer loyalty. New offers are placed on the market constantly and consumers will more than likely be tempted to sign up for multiple subscriptions at once.
The forecast also takes into account that the number of first-time subscriptions is still relatively high, which in turn lowers annual average expenses. However, growing customer loyalty will ultimately have a positive effect on annual per capita revenues.
Unsurprisingly, user demographics suggest that subscribers from Generation Y dominate the market across all countries. In Europe, male users form a slight majority.