A new study is forecasting Internet TV subscriptions will pass pay-TV subscriptions globally by the close of 2020 as more movie and TV studios and broadcasters turn to direct-to-consumer delivery. The result: Internet TV will become the most important technology driving earnings in the film and TV industry over the next two years.
The report, from Global Data, says it expects global streaming subscriptions to surpass 1.1 billion by year’s end, moving streaming subscriptions past pay-TV subscriptions for the first time.
The study posits that there are two factors that are crucial to success for Internet TV players – a strong user interface and a large back catalog of content for consumers to explore.
For Internet TV, content won’t be enough
But even as content continues to be the lure that draws new subscribers – and helps to reduce churn – it likely won’t be enough. The ability for consumers to discover new content in that back catalog will be crucial to any services’ success. And, that discovery and recommendation function will be driven by content surrounded by rich meta data that can integrate with a solid user interface.
Consumers increasingly have eschewed pay-TV services for SVOD services, both to save money and to increase their reach in terms of content, leveraging the “flexibility and range of content offered,” said the report.
In the US alone, more than 2 million consumers dropped their pay-TV subscriptions in Q1.
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‘‘The increased competition in this space has led to a content war,” said Danyaal Rashid, Thematic Analyst at GlobalData. “Players are building up their content libraries in an effort to outperform the rest, but this has come at a high price. For example, Netflix spent $15 billion on content in 2019.”
GlobalData points out that TV consumption continues to move from scheduled TV broadcasts to on-demand video.
The bottom line
In the US, Disney, AT&T and Comcast’s NBC Universal all have recently launched their own D2C offering. And, interest among other studios and broadcasters continues to rise.
Disney has seen the largest success, in terms of subscribers, adding more than 50 million since launching in November.
Comcast is in the process of expanding its initial roll out of its Peacock service and AT&T is working to eliminate some of the confusion around have three similarly named products, HBO Max, HBO Go and HBO Now.
Studios and broadcasters all will fall in line, as consumers take advantage of increasing content catalogs and lower prices. The ability to create their own mini- and micro-bundles of content they’re actually interested in, versus bundles cobbled together by operators, is a powerful force.
GlobalData makes a point worth repeating: No traditional media company, whether in music, newspapers, book publishing, advertising or TV, has ever successfully defended its turf against an unwanted Big Tech disruptor.
Get ahead of the wave.
Stay tuned and stay well.