Pay TV services to account for close to 90% of global video market

Pay TV services will account for 89.7% of the global US$314.3 billion video media market this year, according to Gartner.

The research firm estimates that in 2017 pay TV services will account for US$282 billion of end-user spend, compared to US$18.7 billion for SVOD services and US$13.6 billion for TVOD.

While all three segments are tipped to grow over the coming years, pay TV’s proportion of the market is expected to decline slightly – to 88.2% in 2018, 87.3% in 2019 and 86.2% in 2020.

In 2020 the breakdown of consumer spend is expected to be US$309.1 billion on pay TV services, US$30.1 billion on SVOD services and US$19.2 billion on TVOD services – which comes to a total of US$358.4 billion.

“OTT-VOD sources are changing the landscape,” said Derek O’Donnell, senior research analyst at Gartner. “OTT-VOD services are the fastest-growing segment in the VOD landscape and eroding pay TV providers’ share of revenue. OTT-VOD sources began outperforming traditional pay TV sources in 2016.”

Gartner said that the emerging Asia Pacific and Middle East and North Africa markets are forecast to record the highest growth in end-user spending on consumer video media services in 2017 at 20.8% and 17.4% respectively.

Consumer spend on SVOD services is expected to climb 28% year-on-year in 2017, with the average consumer adoption of SVOD services expected to stand at 10% this year.

Universal search will be “key” to driving further SVOD penetration, but consumers will not subscribe to more than three services because of “price and content discovery fatigue,” according to O’Donnell.

In mature regions, the availability of premium-priced 4K content is expected to increase end-user spending on TVOD content from US$160 million in 2017 to US$400 million by 2020.

However, in emerging regions, increased competition from unmanaged providers and increased threats of piracy is expected to put negative pressure on TVOD prices.