Can Multiple SVoD Services Replace Pay-TV?

Futuresource Consulting’s Tristan Veale presented to the SMPTE on this changing TV and media landscape, with part two of his presentation focusing on shifting content consumption habits. Here’s a taster of what he had to say.

70% of Content Spend is Pay-TV

Consumers inform content creators of their preferences by voting with their money. Globally, Pay-TV subscription revenue dominates the market, accounting for $172 billion in consumer spending worldwide in 2020 and 70% of total global home video spend across Pay-TV, SVoD, TVoD, EST, DVD and Blu-ray.

SVoD on the Up

By the end of 2020, worldwide SVoD spend exceeded $55 billion, with Netflix capturing almost half of all global value. The sector is exhibiting phenomenal growth and driving overall growth of home video spending, with key services able to cultivate a large, well-rounded content offering that appeals to many consumers. Combine this with the convenience of being able to pick up where you left off, no matter what device you decide to continue watching on, and it’s inevitable that SVoD will continue to power the growth curve. By 2024, we expect over a third of home entertainment spend will be on SVoD.

Looking to transactional video, including physical disc sales as well as digital purchases and rentals, this was set to drop to $17 billion in global spend in 2020. However, the overall trend is in decline for the short term, as consumers are moving away from spending on DVD’s and Blu-rays at a faster rate than the increased purchasing via digital platforms, despite the boost to the market in 2020.

Are we Set to Experience an SVoD Future?

Our research shows that the market continues to tip in favour of VoD. When we segment video viewing time by age, the oldest demographics spend the majority of their time watching linear TV, whereas the youngest have significantly more fragmented viewing preferences, with SVoD and AVoD services like YouTube absorbing the majority of viewing time. The burning question is whether these younger age groups will adopt the habits of their parents and grandparents as they grow older, or will their current video behaviours remain with them as they age?

With SVoD revenues growing so rapidly, more companies are launching their own services and the landscape is therefore becoming crowded. With a plethora of services across general entertainment, sports, kids and specialist services, as well as AVoD, the challenge for consumers and therefore the industry will be one of improving search and discovery. While multiple services can co-exist, with consumers stacking services, a deeper integration is required with distribution platforms at a metadata level, as consumers continue down the multiservice route.

While the SVoD services have developed a business model which suits modern living, there remains value in the linear model, with the vast majority of content spend directed that way. Is there a way to combine the two?

SVoD services certainly believe so, as they are experimenting with scheduling and acquiring sports rights - two key pillars of the Pay-TV industry. The aim is to improve visibility on distribution platforms, including fitting in with current EPGs on legacy infrastructure, whilst still retaining the consumers ability to start from the beginning of the program if they wish. Thinking about the customer journey, the first challenge is to entice them to the app or service, with the second challenge being to make it easy to find the right content. Whichever service can make that journey easier will have a competitive advantage. 

Find out more about our latest Video Insights report and Living with Digital Consumer Survey here. Or to discuss the services we provide in more detail, please contact kailash.morjaria@futuresource-hq.com.

About the author

Tristan Veale

Throughout Tristan’s career he has provided thought leading research and insights on the consumption of Motion Pictures, Film and TV series. Now positioned as a leading analyst within the TV and Video content research team at Futuresource Consulting, Tristan informs content creators, distributors and CE manufacturers on the shifting and fragmenting media landscape, helping Futuresource’s clients stay up to date in terms of what consumers want to watch, where they want to watch it, and on which devices.