Global SVOD revenues likely will top $35.04 billion in 2018, an increase of more than 40% since 2017’s $24.87 billion and 214% since the $11.16 billion in SVOD revenue during 2015, a new report says. The biggest gains have come in China, where SVOD revenues are projected to increase 708% to $3.709 billion in 2018, compared to $459 million in 2015.
China is posited to claim 11% of the total global SVOD revenues in 2018 behind the United States which is expected to see 48% of all SVOD revenues, or $16.749 billion. That U.S. total is up 168% since 2015. Its share of the total market has slipped slightly from the 56% it saw in 2015, but there’s no one else in the world that comes close to the size of the U.S. market.
The report, from Digital TV Research, shows Germany with the third-highest revenue growth since 2015 at 248%, behind the U.S and China, a total of $1.038 billion, up from $298 million in 2015. But Germany’s SVOD revenues are exceeded by Japan ($1.093 billion, up 43%) and the United Kingdom ($1.758 billion, up 186%). DTVR says SVOD revenue in 131 other markets increase to $10.696 billion from $2.796 billion in 2015, an increase of 282%.
While annual SVOD revenue growth has slowed overall, it’s pace has varied greatly from country to country. For instance, while China saw revenues pop 161% in 2016, in 2017 growth slowed to 97% and by 2018 it was a still very respectable 57%. In the U.S., annual revenue growth has been far more steady, with Y/Y growth in 2016 at 42%, 2017 at 39% and 2018 at 37%, with most other markets showing similar declines in growth.
But the key, of course, is that the rate of growth is still strong across the board. Remove China from the numbers and the global growth since 2015/2016 flattens somewhat, declining from Y/Y growth of 46% to 44% last year and 39% in 2018. Subtract the U.S. as well, and the numbers show Y/Y growth in 2016 of 53%, 51% last year and a still-robust 42% this year.
While the slowdown, if you can call 42% Y/Y growth a slowdown, is potentially a mild alert that we’re approaching a saturation in SVOD services, there’s still plenty of room for growth among providers of every size. In fact, there’s every possibility that as subscriber erosion among pay-TV services in the U.S. accelerates, SVOD revenue is likely to resume growth, with subscribes simply changing horses, so to speak.
There are other pressures globally that likely will keep SVOD revenue growth above 40% for several years to come, including the looming launch of next-gen 5G mobile services, a technology tailor made to drive OTT growth in less-developed markets (as well as more mature ones like Europe and North America).
In September, MTM and payment specialist Vindicia posited that the continued flow of premium content online – and easier payment solutions - will play a large part in the market’s growth. Both are factors we’ve talked about for the past eight quarterly Video Indexes. Content that previously could only be found behind paywalls has poured into the OTT ecosystem, as content owners and distributors look to tap into what has rapidly evolved from an incremental revenue stream to a one that eventually will be the dominant one.