- United States, China the two largest global markets
- In 2016, video on demand surpassed DVD sales
- Millennials favor streaming more than other groups
The number of homes worldwide with subscription video on demand (SVOD) services will reach 428 million by 2020, Digital TV Research forecasts. This is an increase from 177 million in 2015 and 248 million in 2016.
Revenue will be 18 times higher than that of 2010 in 2021, reaching $32.18 billion. In 2016 alone, revenue grew $5 billion, reaching $17.46 billion.
The U.S. and China will have the largest markets with 127 million and 74 million subscribers in 2021.
“North America supplies most of these subscribers at present, but Asia Pacific will become the top region by 2019,” Simon Murray, Principal Analyst at Digital TV Research, said. “This comes despite Netflix being unlikely to secure direct access in China and only making a limited impact in other major population centers such as India and Indonesia. There are some large SVOD platforms in Asia Pacific that have been active for some time, especially via mobile phones.”
Outpaces DVD Sales
In 2016, SVOD outpaced DVD sales for the first time. Last year, $5.4 billion DVDs were sold compared to $6.2 billion in video on demand subscriptions, according to Digital Entertainment Group.
The trend shows that renting single titles is a sales model that has been transformed in the digital age. Industry experts had predicted electronic-sell-through platforms like iTunes would replace movie rentals.
When compared to 2015, DVD sales dropped 10% while SVOD grew 23%, but that’s 2% less than its 2014 increase.
Electronic-sell-through platforms grew 5.4%. This growth is much lower than the 30% experienced in 2014 and the 18% in 2015.
Overall, home entertainment spending increased 1.36%, reaching $18.3 billion.
Millennials Prefer Streaming
Use of SVOD, though, does appear to be generational.
Millennials watch 25% of television live and stream 54%, according to Horowitz Research. For older generations, however, 50% of television is viewed live and 29% is streamed.
Horowitz Research released its State of Cable and Digital report annually. Since 2012, the number of hours Millennials view programming live has dropped 75% while the amount of streaming has increased 39%.
Of the Millennials that view content live, 36% watch on Netflix while 29% watch on a television.
The majority of Millennials, 76%, prefer a combination of streaming and live TV. Only 13% stream exclusively.
- By 2021, Netflix will have nearly 118 million paid subscribers, 27.5% of the world’s SVOD users. In 2018, the number of international subscribers will overtake American ones, although the U.S. will contribute 44% of subscribers through 2021.
- In 2021, Netflix subscription revenue will be double to $13.14 billion from $6.37 billion in 2015. In 2021, North America will contribute 52% of total revenue despite growth elsewhere,.
- Netflix has distribution partnerships with 79 pay TV, telco or mobile operators in 44 countries.
- Digital TV Research assumes 60% of Amazon Prime subscribers watch video.