The continued growth of the subscription video-on-demand market is being fuelled by ‘SVOD stacking’ as adoption among new customers slows, according to Ampere Analysis.
The research firm claims that while Netflix is the dominant player in all but three markets surveyed, the service alone “simply isn’t enough” for many consumers, with service staking now the norm and household spend on over-the-top services “rocketing”.
According to Ampere figures, the average SVOD home in the US now takes 2.8 services, while in established European markets like the UK and Germany the average SVOD home takes two services.
In the first quarter of 2018 SVOD spend in the US was found to be the highest at US$35 (€30) per household, up from US$15.6 in Q3 2015. In the UK, spend rose from US$10.4 to US$18.7 – a trend that Ampere said is echoed in “the majority of markets”.
“Netflix and Amazon have acted as catalysts for SVOD stacking, particularly in those European markets where they have seized the initiative through low cost subscriptions,” said senior analyst at Ampere Analysis, Toby Holleran.
“While some European countries have been slower to adopt SVOD, the American giants are now part of the package in virtually every SVOD household. This is particularly notable in The Netherlands, where nearly three in four SVoD households take only Netflix.”
While SOVD growth has slowed in markets such as the UK, Germany and Poland, it is nevertheless starting to eat into pay TV growth, according to the research.
In the UK, partnerships between pay TV providers and SVOD services were found to be “bearing fruit” for services like Netflix and Amazon Prime, with pay TV uptake remaining static as SVOD adoption grew 4% year-on-year in Q1 2018.
In Germany, local SVOD players like Maxdome and Sky Ticket are “just about holding their own” despite a growing presence from Netflix and Amazon, while leading OTT services in Poland operate multiple business models in order to compete against an inexpensive pay TV sector.
Elsewhere, French and Spanish SVOD households averaged 1.5 video-on-demand subscriptions by the first quarter of this year, while Italian households had an average of 2.0.
In the Netherlands and Sweden a third of internet homes subscribed to SVOD services between Q3 2015 and Q1 2018, at the same time as pay TV suffered declines of 15% and 11% respectively.
“While the SVOD market may be near saturation point in terms of the number of households it attracts, there remains significant growth opportunity as viewers increasingly stack services,” said Ampere Analysis research manager, Tony Maroulis.
“Although in some cases a growing number of SVOD subscriptions is leading to a decline in pay TV, that is certainly not always the case – heavy stackers are most likely to have pay TV services. Clearly there’s a healthy appetite amongst consumers worldwide for quality content across a range of paid-for platforms.”