Rethink Technology Research finds that long-form video from outside the traditional pay-TV ecosystem will grow aggressively, as new generation of viewers strays farther from reach.
A new generation of consumers is emerging that is ever more likely to never take a TV service, and we’re looking at a market that looks set to eventually stray away from even fixed-line broadband and telephony, acc wording to the research.
But those changes are decades away, at least. For now, in the next five years, Rethink Technology Research sees continued gradual declines in pay TV customers, the expected growth in SVoD services, and the emergence of these new kids – which will greatly upset the advertising industry, as they begin to pivot away from pay-TV.
Rethink TV forecast demonstrates the slow decline of pay TV, and the rise of the OTT market – both SVoD, and this new sector. So while the growth in SVoD that stems from the conventional TV and movie industry does more than offset the losses we see in pay TV line, what Rethink TV wanted to do was quantify ‘the other’ – long-form video content that does not originate from TV and film studios, that isn’t delivered over pay TV infrastructure, and that is often available freely to viewers.
Defining this sector has been difficult, but Rethink chose to focus on three constituent parts – Long Form online video, Social Media video, and Gaming video. Collectively, for the purposes of this forecast, they are referred to as LSG.
The research shows how LSG grows faster than SVoD, and is on track to close the gap with pay TV within a couple of decades. That event could be the end of pay TV as we know it and of course sports rights, as they de-couple from pay TV could have a huge part to play in that.
Collectively, LSG stands at around $118 billion in annual revenue currently, comprised mostly of advertising revenue, but with a sizeable chunk of subscriptions in there too. In 2025, Rethink expects this to have grown to $171.5 billion. This compares to the aforementioned pay TV revenue of $363.5 billion, chronicled in the company’s Operator Profile database, and their top-five SVoD forecast, which grows to $72.3 billion.
In 2020, pay TV revenues are around 3.2x the size of LSG, but by 2025, will only stand at 2.1x the size. In 2020, our LSG sector revenue represents 31% of pay TV, but come 2025, will have increased to be 47% of pay TV’s revenue – according to our Operator Database data and this new research. Put another way, in five years, LSG will be worth nearly half that of pay TV.
Sticking with the definitions outlined above, Long Form represents services like YouTube, Vimeo, and Dailymotion, but does include those that have some subscription tiers, such as Crunchyroll and Voot.
The Long Form segment overlaps strongly with AVoD, but we are mindful of China’s influence on the numbers – due to the hybrid fashion in which its FTA options are available inside these platforms. To this end, Rethink has broken out Tencent Video, iQIYI, Youku, and Le.com separately, which will be examined separately.
Social Media is fairly self-explanatory, and is an attempt to quantify just how much video is watched across the global social media platforms. The popularity of live video streams, from people to friends and family, as well as from businesses and personalities to their audiences, has surprised many. The length of some of these streams sometimes veers into long-form territory too, and with video still proving the most engaging content on these platforms, the more time spent here by consumers, the less time that is available to spend in the pay TV ecosystem.
Gaming is by far the smallest of the three segments that comprise LSG, but it has the most engaged audience – as you will see in our discussion of KPIs, later. It also has the fewest players, and as many of you will know, is currently dominated by Amazon’s Twitch. Of course, Microsoft has just turned this sector into a three horse race, by closing down its Mixer service and pushing its users and streamers towards Facebook Gaming. Google’s YouTube Gaming is the third player here, and while Twitch leads the market currently, its rivals have immense online platforms to leverage, to drive more eyeballs to their gaming services.