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Home›Online Subscription›VidNet 2022: “More than half of the world’s online video services are funded by subscription”

VidNet 2022: “More than half of the world’s online video services are funded by subscription”

By Bradley M. Wells
April 22, 2022
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Mumbai: More than half of online video services globally were subscription-funded by end of 2021, study finds. Key findings from the study highlighted that while there are more subscription-funded over-the-top (OTT) services around the world, advertising is a much bigger source of revenue for video-on-demand platforms. . Ad revenue will also outpace subscription revenue over the next five years, pushing many global OTT players, including Netflix, to introduce an ad-supported plan on their platforms. This information and more was revealed during the ‘Trends in Global OTT’ session presented by Omdia Senior Senior Analyst – Digital Content and Channels Tim Westcott at IndianTelevision.com’s VidNet Summit 2022 on Thursday. .

The two-day industry event was supported by technology partners Dell Technologies and Synamedia, summit partners Applause Entertainment and Viewlift, industry support partners Gupshup, Lionsgate Play and Pallycon, community partners Screenwriters Association and Indian Film and Television Producers Council and gift partner The Ayurveda Co. .

Omdia is a research company that focuses on the technology, media and telecommunications sector and connects the dots in the global media ecosystem.

Westcott shared that there were 5671 online video services available at the end of 2021. This includes video sharing services like YouTube, subscription video on demand (SVOD) services like Amazon Prime Video, Netflix and transactional video services like Apple iTunes. “We have seen a plateau in terms of the number of online video services that peaked in 2019. New services are constantly being launched to replace older online video brands. Some services have been shut down because they failed to generate profits.

There were slightly more OTT services in 2021 than in 2020. There are 2,222 subscription-funded online video services, followed by just over 2,000 AVOD platforms and 1,362 transactional video-on-demand services. There were just over 1,000 dedicated sports streaming services, 600 virtual pay-TV operators, and 463 free video-on-demand services. Free VOD services are either promotional channels or services funded by public broadcasters.

There are about 127 online video services in Central and South Asia, of which 51 are AVOD services and 45 are SVOD services. “Despite SVOD’s advertising, advertising is the biggest source of revenue and has been since 2010,” Westcott said. “It will overtake subscription as a source of revenue for online video services over the next five years.”

The online video world is dominated by YouTube and Facebook. Many OTT streaming services have started offering advertising, including HBO Max, Peacock, Hulu, Disney+ (later this year), and Amazon Prime Video. “We heard recently that Netflix was considering adding a level of advertising,” Westcott noted. “It’s no surprise as ad-supported plans are already being rolled out by other OTT players. We expect online video advertising to overtake linear advertising in 2022. It’s a very strong source of funding that will continue to grow.

The number of online video subscriptions worldwide has grown dramatically since 2015 with the launch of more streaming platforms. Amazon Prime Video and Netflix launched globally in 2012, followed by Disney+ and Apple TV+ in 2019, HBOMax and Peacock in 2020 and Paramount+ in 2021. advent of SVOD platforms from American studios. Previously, these studios sold content directly to OTT players, but now see them as competitors. »

Omdia also conducted consumer research in eight countries, including India, to understand consumer preferences for OTT services. They found that in most countries, the arrival of SVOD services had decimated pay-TV subscriptions. For example, SVOD services in the United States have reduced existing pay-TV pricing and led to a dramatic drop in pay-TV subscriptions. The ability to watch content on-demand and binge-watch is something consumers have embraced with enthusiasm, according to Westcott. The situation is similar in other countries where pay TV has not declined as much as in the United States, but there are more SVOD subscriptions in most cases.

India is slightly different from other markets as the price differential between SVOD and Pay TV is not the same. In India, SVOD is a premium service while Pay TV tends to be cheaper. There are also many more Pay TV households than SVOD in India, but that’s also because a lot of people get their TV services through scam operators.

“While there is a growing range of SVOD services launched each year, it is clear that not all households will subscribe to all of these services,” Westcott observed. “Our research shows that people use free, ad-supported services the most. Thus, YouTube is the number one choice in many countries, including India. Before 2021, YouTube was the largest online video service, followed by Facebook Watch, then Disney+ Hotstar’s ad-supported free tier. Amazon Prime Video and Netflix are in the middle of the rankings among the top ten OTT services.” Netflix said it competes with Sleep for time of the consumer, but in reality, all online video services, whether AVOD or SVOD, compete for consumer attention,” Westcott said.

When Omdia asked consumers what they valued most in an SVOD service, most respondents answered overwhelmingly that original exclusive content, i.e. content that is not available anywhere besides, was the most important aspect of any OTT. Consumers also wanted to watch the most talked about TV shows they hadn’t caught up with yet. The depth of the content catalog is considered the second most important aspect for consumers of online video services. Advertising or lack of ad-supported content was also a big issue for some consumers, but not as much as original content.

Omdia’s Westcott also shared exclusive data during the VidNet Summit 2022. The data showed that the number of original productions that were transmitted in 2021 by streaming services including Amazon Prime Video and Netflix was lower than the last year. There were also fewer hours of original content last year. Netflix produced the most original content at 1767 hours. “The main reason for the decline in original productions is due to the production disruption that began in 2020 due to the pandemic. We are seeing this disruption impacting the delivery pipeline for players such as Netflix and Amazon Prime However, if you compare what Netflix offers to a typical US linear TV service, it’s still a massive amount of original content.

More global OTT platforms order originals locally. Netflix has ordered content in 47 countries in 2021 outside of the United States. Netflix’s most successful hits are produced outside the United States in languages ​​other than English. Over the past five years, Spain (Spanish shows) has been the largest source of drama content for Netflix, followed by India. “When Netflix came to India, they weren’t able to get as much local content as they would have liked and therefore were forced to create content,” Westcott said. “In addition, Indian audiences prefer local content. While they will watch content from other countries, what they are looking for is local content. »

Similarly, India has ranked as an important market for Amazon Prime Video, as most of its original drama productions outside of the United States have been made in India over the past few years. Many direct-to-consumer services offer a wider range of content and not just original content, even as they increase their original productions. American studios expect their new movies to be a very important part of their SVOD service. Studios like Disney, Paramount, Universal, and Warner Bros plan to release their movies exclusively on their SVOD services after theatrical release. They also have extensive libraries of film and TV content. Recently, Amazon completed the acquisition of the former MGM film studio and has access to 50% of all James Bond titles.

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