Despite worries around market saturation and subscription fatigue, SVOD services are booming in the US. So, what’s contributing to the growth in the subscription OTT space?
According to a new report published by eMarketer
, around 170.1 million people in the US will have subscribed to a video streaming service by the end of this year. This number represents 60.8% of all internet users in the country. Add to that the increasing adoption of subscription streaming services in emerging economies
, and it is clear that the industry is booming and poised for further growth in the future. Little wonder then that companies such as Apple and Facebook are looking to ramp up their presence in the subscription space.
Traditionally, subscription services have been preferred by millennials because they are more tech-savvy and prefer the flexibility that comes with recurring billing plans. But, more GenXers and baby boomers are now subscribing to subscription video on demand (SVOD) services too, which is driving new growth opportunities for these OTT businesses. This interesting finding should also excite new subscription businesses that are aiming for a slightly older demographic.
Interestingly though, it doesn’t mean that GenXers are cord-cutting like the millennials. The rise of smart TVs and connected TV devices have simply made it easier to watch on-demand content, in addition to traditional pay TV offerings.
‘Original’ Content is King
The study points at original content as a big reason for the growth in SVOD services. Clearly, many of the shows that have captured the imagination of the people in recent times are original offerings by services such as Netflix, Amazon Prime Video and others. Netflix is second to none as far as new shows are concerned and the subscription giant has even committed to doubling its original content in the face of increasing competition.
However, other services like Amazon Prime Video and Hulu are not faring badly either. While subscription fatigue
is an increasing concern for businesses in the sector, the report indicates that customers are willing to subscribe to multiple services if the OTT provider has a good catalogue of original content. Customers do not want to miss out on the latest hit shows and are not price sensitive when it comes to adding multiple subscriptions.
Netflix firmly in the lead
When it comes to SVOD, Netflix continues to be miles ahead in the race. Despite reports about a saturated market in the US, the service continues to grow in the region and is often the first video streaming service tried by subscribers. The company reported 5.5 million additional subscribers in Q3, compared with the same period last year. The number doesn’t even take into account family-shared accounts, shared passwords and multiple logins. Netflix was also the highest earning non-gaming app last year.
eMarketer forecasts that Netflix will reach 147.5 million users this year, making up more than half of all internet users (52.8%) in the US. Amazon Prime Video and Hulu are expected to be at second and third place with 88.7 million and 55 million subscribers respectively.
The number of SVOD users in the US is expected to grow to 181.5 million by the end of next year, which shows that there is still a large market waiting to be tapped. With Disney, Apple and AT&T expected to launch their own streaming services next year, 2019 seems to be yet another blockbuster year in the making for streaming video services.