SVOD’s Growth and the Erosion – Not Implosion – of Pay TV


The rise of subscription-based video on-demand  (SVOD) services has been one of the most disruptive forces the TV industry has ever encountered. Ad-free, online and on-demand, there was a honeymoon period when the likes of Netflix and Amazon were everything the TV establishment wasn’t. Since then we’ve seen broadcasters and operators launch their own SVOD services with varying degrees of success, whilst the new SVOD entrants have slowly started to chip away at pay TV subscriptions around the world as many consumers either cut the cable cord or shave a little off.

218229If we want to make predictions about the short-term future, the US is the best place for us to look at it is the world’s most advanced SVOD market. SVOD penetration is currently around the 58 percent (of the population) mark according to eEmarketer, with that figure expected to rise to 71 percent by 2020. But whilst the adoption rate has been astonishingly fast for a paid media service, it is still far too early to be talking about the TV establishment’s downfall.

First, let’s look at pay TV subscriptions. In the US 87 percent of households were signed up to a pay TV service back in 2011, and that figure has fallen to 82 percent today, according to research from Leichtman Research Group. But that figure is comparable to the 82 percent of household subscribers in 2005. Whilst that represents a significant decline, it’s a far cry from the type of declines we have seen in other forms of ‘traditional media’ like print.

Also, a number of studies (from Horowitz in the US, and by BARB in the UK) have found that more often than not, SVOD and pay TV often co-exist in the same homes. Whether this is a long-term trend is hard to say, although it seems highly unlikely if the SVOD services continue to grow out their content libraries and subscriber-bases.

According to Nielsen, live TV viewing in the US is still by far the most dominant form of media consumption: t

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And the change in consumption levels over the last few years has been far from revolutionary:

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One of the SVOD impacts that Nielsen has identified is that people SVOD households tend to watch fewer channels:

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If you’re working in advertising and are surprised that SVOD’s impact is so low, Thinkbox, the TV industry’s marketing body in the UK, say that that’s because people who work in advertising tend to be more tech and media-savvy than the rest of the nation, and that we consistently over-estimate how much people are actually watching TV.

An independent survey carried out by Ipsos on behalf of Thinkbox found that our perceptions of what we watch is very different from the reality, at least if BARB’s data for SVOD consumption is accurate:

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Thinkbox also looked at things like the influence of social. People working in advertising are four times more likely to have used Twitter within the last three months than the general population. Similarly, we are more than twice as likely to have used Netflix or Amazon Instant Video within the last few months:

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Finally, Thinkbox say given the findings above, it’s hardly a surprise that those of us working in the ad industry are three times more likely than the British public to watch programmes on Netflix such as House of Cards, Orange is the New Black and Mr. Robot.

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Looking to the future, it seems inevitable that SVOD services will eventually become the pay TV platforms of the future, whether they’re


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