IDATE has released the latest version of its “TV and video services worldwide” market report analysing changes in viewer habits, TV access networks (terrestrial, satellite, cable, IPTV) and revenue sources (linear TV, pay-TV, DVD, Blu-ray, VoD) in more than 40 countries.
The report’s project manager, Florence Le Borgne, comments that, ‘even though we are watching more video than ever before, revenue growth for the global video market is being stunted by the inexorable drop in video hard copy sales, and by the pressure that OTT distribution is putting on traditional TV business models’.
According to IDATE, television revenue worldwide will increase from €368.9 billion in 2014 to €424.7 billion in 2018, which translates into an average 3.6 per cent annual growth, compared to the 5 per cent reported between 2010 and 2013:
• Pay-TV revenue is forecast to decrease dramatically over the next few years, with average annual growth dropping to 2.8 per cent between 2014 and 2018, compared to 6.1 per cent between 2010 and 2013. Despite which, it will continue to be the main source of TV revenue up to 2018, bringing in €195.9 billion in 2018;
• Advertising revenue is expected to enjoy more dynamic growth overall, in line with its trajectory in recent years: 4.8 per cent a year up to 2018, compared to 4.6 per cent per annum over the past four years, to reach €193 billion in 2018;
• Funding from TV licensing fees will continue to increase significantly: by an average 1.5 per cent a year, to reach €36 billion in 2018.
The revenue generated by VoD will climb to €34.4 billion in 2018, thanks to a solid and steady increase (+131.5 per cent compared to 2013) and will represent more than double hard copy sales (€15.5 billion in 2018) by that time.
• OTT video is expected to consolidate its dominance of the VoD market, accounting for more than 80 per cent of on-demand revenue.
• VoD rentals will continue to be the central model on managed networks, generating €4.7 billion in revenue in 2018, compared to 3.3 billion in 2014.
• The hard copy market will continue to shrink across the globe, losing close to a quarter of its value in 2014, despite the growth of Blu-ray.
TV revenue growth forecasts by market, 2014-2018 (billion Euro)
Video on Demand Focus: Increasingly competitive OTT players
• Despite the popularity of premium cable channels, Netflix now rivals top dog, HBO. Although subscriber numbers for the top premium cable channels in the US (HBO, Showtime, Starz) have remained relatively stable, and are even increasing for some – +13.3 per cent and +14.2 per cent, respectively, for Showtime and Starz between 2010 and 2013 – the real momentum today is behind OTT services, starting with Netflix whose customer base grew by 71.4 per cent between 2010 and 2013. At the end of June 2014, Netflix had 36.2 million residential subscribers, including 35.1 million paying customers, compared to 28.6 million subscribers for HBO in the US.
Will the top American SVoD providers dominate the global market?
As of October 2014, Netflix is present in 46 countries, and reporting a base of 13.8 million subscribers worldwide. This means that it alone controls two thirds of the globe’s subscription VoD customers. By way of comparison, HBO is present in 61 countries in Latin America, Asia and Europe, and has more than 35 million subscribers, of which a growing percentage to its HBO Go service. Meanwhile iTunes leads the way in electronic sell-through (EST), earning 65 per cent and 67 per cent of movie and TV programme sales revenue, respectively, in 2012. Virtually all European countries have access to the company’s video rental service, while residents in eight countries – Germany, Austria, Spain, France, Italy, Ireland, the UK and Switzerland – can also download to buy from the iTunes store. Only smaller national companies are competing with these heavyweights. And while some are popular – France’s CanalPlay VoD service has 520,000 subscribers – one cannot help but wonder whether they can hold their own against these global titans.
Also noteworthy is that Netflix outperformed HBO in terms of total SVoD revenue for the first time in Q2 2014: generating $1.146 billion vs. $1.141 billion for the premium cable channel.
Source: http://advanced-television.com/2014/10/20/pay-tv-to-remain-main-source-of-tv-revenue-into-2018/
