Total spending on subscription video on demand (SVOD) in Western Europe is forecast to reach €3 billion ($3.6 billion) by year-end 2016, up 50% from 2015’s €2 billion ($2.24 billion) mark.
“The multi-territory international players changed the game dramatically for SVOD in Western Europe in a very short period of time,” said Tania Loeffler, an IHS Technology analyst. “When Netflix launched in the U.K., total consumer spending on SVOD in Western Europe more than doubled to €307.6 million ($344.5 million) in 2012. By the end of 2014, that figure had more than trebled to €1.1 billion ($1.23 billion) due to Netflix’s European expansion and the launch of Amazon Prime in the U.K., Germany and Austria.”
The United Kingdom will remain the standout market in terms of consumer spending on SVOD, forecast to spend about €1.0 billion ($1.12 billion) by year-end 2017 and will retain a consistent 35% share of total SVOD market spending through to 2020.
While market saturation will slow SVOD revenue growth, the business is still expected to be the largest chunk of home video spending by 2020, accounting for 58% of share, or about €5.2 ($5.8 billion). It will be just less than half (49%) by 2018 when revenues are forecast to reach
€4.2 billion ($4.7 billion) of home video spending in the region.
The Nordics – Sweden, Norway, Denmark and Finland – and Belgium, the Netherlands, and Switzerland have generated “disproportionately significant (SVOD) spending,” IHS said, noting the higher broadband penetration rates in Sweden (3.2 million households) and Norway (2.1 million), compared to Germany’s 26.9 million. Not only is broadband more ubiquitous in those countries, but household spending on online SVOD in Sweden (€23.16) was 3.8X more than in Germany (€6.06) and 14.8X more in Norway (€89.46).
IHS also forecast Norwegians would spend a total of €239.6 million on SVOD in 2016, rising to €318.3 million by 2020, similar to spending in the 4X larger markets of Spain and Italy. By 2016, Belgium and the Netherlands combined will account for 10% of total SVOD spending in Western Europe. The Nordics, Netherlands and Belgium all were early launch sites for Netflix’s European expansion and have had time to mature.
Spain and Italy both will have ben Netflix markets for a full year by the end of 2016, and both have seen strong growth. Spain is forecast to see SVOD revenue grow 124% to €59.9 million and Italy is forecast to reach €94.7 million, a 112% Y/Y increase. Spain is expected to remain a strong SVOD markets, holding an 11% share of Western European SVOD revenues by 2020.
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