Direct-to-consumer initiatives such as HBO Now and Sling TV herald a new era in online streaming as premium, stand-alone services based on content once exclusive to traditional pay TV hit the market. While free, ad-supported, and bundled multiscreen streaming has driven huge usage volumes, Ovum believes that a new era of streaming entertainment is upon us.
Tony Gunnarsson, a senior analyst in Ovum’s TV Practice, comments: “Until now, watching the latest Hollywood movies and TV shows has largely been the preserve of downloads, discs, and pay TV. What we’re seeing in maturing markets such as the US is that the audience is shifting towards premium linear streaming, which is augmenting well-established free on-demand services such as YouTube. Home entertainment is evolving as subscription-based VOD services reach the mass market: It is now commonplace to watch original productions such as Bosch from Amazon’s Prime Instant Video streamed to the main TV. The emergence of stand-alone – often linear – streaming propositions such as PlayStation Vue and Yaveo represent the first that truly substitute for traditional pay TV.”
The key trend is the proliferation of stand-alone OTT services launched by traditional TV players, such as HBO Now, CBS All Access, and DISH’s Sling TV. Hence Ovum expects the reassertion of the traditional TV value chain, pushing back against technology-led OTT specialists such as Amazon, Netflix, and Hulu. We believe that the emergence of such services will help drive the global total of online streaming subscribers past 100 million in 2015, with a further 77 million more expected by 2019.
Figure 1: Global SVOD subscribers and SVOD household penetration, 2012–19
Source: Ovum 2015 OTT Video Forecasts
This will have a number of impacts on the visual entertainment ecosystem. Naturally an already unforgiving competitive environment will intensify. Services which fail to understand the increasingly complex array of choices available to the audience will struggle against those that address the need for connectivity, perhaps in hardware as well as content. There is likely to be much downward pricing pressure as the multiplay offers will ruthlessly discount bundled services which lie outside the core business of the seller. Ovum does, however, expect some upside for companies which produce the content which the audience craves: More distributors and perhaps even the creaking open of another release window will offer more negotiating leverage for the creators of the most dearly loved TV shows and movies.
Ed Barton, Ovum’s Head of TV Research and Analysis, says: “We are on the cusp of the next major evolutionary growth phase in visual entertainment. As the industry hunts for opportunities to address slowing traditional TV subscription revenues, the major trends in technology, audience consumption, and service evolution offer glimpses of a brighter future. We see a shift in how TV is increasingly addressing individuals rather than households, and how the merging of online and broadcast advertising technologies and the ongoing hunger for true ‘Martini TV’ – any time, any place, anywhere – from the audience offers significant incremental revenue opportunities. The proliferation of linear SVOD from traditional TV is just one part of this shift which underpins our firmly held view: TV’s best days lie ahead.”
NOTES TO EDITORS
*OTT Video Forecast data tool
Ovum has finalized a major revision of its global OTT Video analysis, covering all the world regions and 19 selected ‘Ovum tier 1’ territories. The new OTT Video analysis includes all mainstream contemporary OTT Video and TV – digital retail, rental, and subscription – across a range of metrics including revenues, transactions, and average price, as well as genre and resolution splits, and what may very well be the worlds’ first OTT Video platform usage analysis conducted across active devices.
To arrange an interview with Tony Gunnarsson or Ed Barton or for further details regarding this release, please contact Jennifer Duraisingam in the Ovum press office on +613 9601 6723, or email firstname.lastname@example.org
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