Global VOD market forecast to top $100B by 2026; SVOD in 50% of US homes

By Jim O'Neill on Mar 11 2016 at 8:45 AM
Global VOD market forecast to top $100B by 2026; SVOD in 50% of US homes

Consumers’ shifting viewing preferences, increasing penetration of high-speed broadband and a wealth of premium content availability is fueling a surge in video-on-demand services that could help global VOD revenues top $108.6 billion by 2026, a new report says.

Last year, the global VOD market brought in $48.93 billion in revenues, Future Market Insights reported, up from $45.03 billion in 2014. The researcher forecast that the market will continue to grow through 2026 at a CAGR of 8.3%.

Much of the growth will be driven by younger viewers, as animation VOD – which was valued at $7.38 billion in 2014 -- is forecast to expand at a 9.7% CAGR. FMI said the growing popularity of top rated animation programs like Harry the Bunny, Numbers around the Globe, Rainbow Horse, Blue's Room and Curious George on VoD platforms would be a major contributor to expansion.

FMI noted that the North American VOD market was the largest in the world, with nearly $20 billion in revenues in 2015. The U.S. is at the core of the growth, it said, with Canada and Mexico supplementing growth.

Partnerships between content providers and CE players is helping to push VOD services further, FMI said, noting the deal between HBO and Apple to bring HBO Now to market in the U.S.

APAC looks to be a leader as mobile grows, investments swell

But the highest growth market for VOD is expected to be Asia Pacific (excluding Japan), mostly due to a rapidly growing subscriber base with high speed Internet service in the region.

FMI also called out potential opportunities for VoD service providers like including Netflix, Hulu and Home Box Office in India, China, Philippines and Indonesia as smartphone and tablet penetration continued to grow in those emerging economies.

A good example of the potential in APAC is the recent investment by pay-TV group Sky – controlled by 21st Century Fox – in nascent SVOD service iflix.

The company is investing some $45 million in the startup, part of iflix’s latest round of funding.

The money will be used to collaborate on content production and on developing technology.

iflix has begun to aggressively expand in the APAC region, going head-to-head with Netflix and a number of other local and global services.

SVOD now in more than half of all U.S. homes

Pivotal Research, meanwhile, in a report this week said more than 50% of U.S. households now subscribe to at least one SVOD service, up from 43% a year ago.

Pivotal contends that SVOD services like Netflix, Amazon Prime Instant Video and Hulu, haven’t cannibalized traditional TV viewing.

But, the reality is that there’s little question it’s beginning to and that the erosion is likely to continue as younger users establish their own households.

“Core television viewing trends are down only modestly, and not by much more in homes accessing SVOD services than in those without them,” Pivotal Research reported.

The crucial phrase, of course, is that viewing is “down only modestly” in non-SVOD homes, while SVOD homes are down slightly more.

That, my friends, is the start of a trend with a very long life to come.

Pivotal reports that 45% of homes now have a Netflix subscription, up from 38% Y/Y, while Amazon Prime is in 21% of homes, a big increase from the 15% of home sit was in last year. Hulu, too is showing growth. It was in 10% of homes, up from 7%.

Stay tuned.

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