Three OTT video services — Netflix, Amazon Prime Video and Sky’s Now TV — accounted for 97% of the total subscriptions market in the UK at the end of 2018, according to Kagan, a research group within S&P Global Market Intelligence.
Kagan estimates that in 2018, each OTT household in the UK subscribed on average to 1.4 services, a figure that has been consistently rising since 2013 as consumers opt for multiple subscriptions to satisfy their diverse viewing appetites. The research company projects this number to increase, albeit at a declining rate, and most of the future OTT growth to come from new service launches.
Netflix far outperforms its competitors by generating over $30,000 per hour of acquired programming, compared to only US$5,200 for Prime Video and $17,500 for Now TV.
The UK is one of the most developed OTT video markets in Europe, with 47.9% of broadband homes paying monthly for at least one service. Streaming video providers compete with local broadcaster-owned ad-funded services and multichannel TV providers as the share of viewing is shifting from linear to time-shifted.
Broadcasters have three options in dealing with international internet video players. The first is to invest in a joint fund and launch their own branded streaming services. The second is to work with global OTT providers in co-producing programs. This usually means the local participant keeps linear/OTT rights within the national territory while leaving worldwide rights to the streaming provider. A lot of broadcasters tend to believe the loss of revenue outside their local markets is quite significant and, as a result, this strategy has become less lucrative. A third option is to lobby local authorities for stricter regulations regarding video streaming.
Kagan estimates that in 2018, each OTT household subscribed on average to 1.4 services, a figure that has been consistently rising since 2013 as consumers opt for multiple subscriptions to satisfy their diverse viewing appetites. Kagan projects this number to increase, albeit at a declining rate, and most of the future OTT growth to come from new service launches.
Kagan has calculated the amount of income each hour of programming can generate, based on the estimated yearly revenues of these services. Netflix far outperforms its competitors by generating over $30,000 per hour of acquired programming, compared to only $5,200 for Prime Video and $17,500 for Now TV. This translates to Netflix having more room to spend on acquiring programming and keep growing its customer base at a given price point. The lower figure for Prime Video backs up the theory of Amazon investing in programming as a way to grow its e-commerce business.
