APAC’s subscription video on-demand (SVOD) subscriber numbers will more than double to 157.8 million by 2021, up from an anticipated 76.1 million at the end of 2016, a new report says. That’s an increase of 279% from the 41.7 million subscribers the region had at the end of 2015.
The rapid scaling comes as an increasing number of services launch in the region and as the Netflix deployment to the entire region in January of this year begins to gain traction.
Digital TV Research, in Asia Pacific SVOD Forecasts said the explosion in subscribers also is being driven as rapid smartphone subscription growth continues, especially in China where DTVR expects the country to command 47% of the 2021 total SVOD subscribers – up from 38% in 2015.
From the 82 million additions between 2016 and 2021, China will supply 34 million, India 15 million and Japan 9 million
SVOD penetration across the 17 countries in the report is expected to increase to 17.5% by 2021, up from just 5.1% by end-2015 and 9.1% expected by end-2016.
Four countries are expected to have penetration rates exceeding 50%, with Australia topping the list at 53.5%, Pakistan will have the lowest penetration, just 8%.
While China will be responsible for 41% of the new SVOD subscribers, the bulk of the growth will come from smaller entrants that will flood the market with content. Collectively, the five largest players in the market now -- Netflix, Amazon, Iflix, HOOQ and Viu – will account for 16% of the region’s SVOD subscribers by 2021.
“Netflix is forecast to have 7.59 million subscribers in the region by 2021, up from 3.17 million at end-2016,” Simon Murray, Principal Analyst at Digital TV Research, said. “Australia, Japan, Korea and New Zealand will together account for nearly three-quarters of the total. Netflix is considered expensive in most other countries.”
Why no Netflix in China?
China presents a regulatory challenge for foreign companies doing business there and is even more challenging for Internet companies (just ask Google). So it’s no surprise that in its earnings letter to shareholders this week the company cooled speculation that it would soon launch in China:
“The regulatory environment for foreign digital content services in China has become challenging. We now plan to license content to existing online service providers in China rather than operate our own service in China in the near term.”
Underline “in the near term.”
At the moment, Netflix is riding high, its stock price bounced some 20% after it released international subscriber growth numbers that topped analyst expectations, adding 3.2 million subs in the quarter, 60% more than the 2 million expected.
But, at some point, that subscriber growth in its international business (and churn) will slow, just as it has in the United States.
That’s when Netflix will again look longingly at the world’s biggest potential market and – just as Apple and others have done – then it will be worth jumping through regulatory hoops it has to in order to overcome the great (regulatory) wall of China.
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