Report: Pay-TV services ride coattails of SVOD services

ott content
SVOD services used to be seen as supplemental to pay TV, but a new study shows the roles are reversing

Households that include SVOD services like Netflix continue to grow globally, displacing subscriptions to pay-TV and premium channels, a new report shows. The report, from Ampere Analysis, contends there’s still value in the pay-TV product, but it’s clear it’s operators who now are hitching a ride on SVOD’s coattails.

In fact, Ampere notes, there are several countries where there are more HHs that have SVOD services-only than pay-TV-only or a combination of pay TV and SVOD – specifically, Japan, Italy and Australia.

The most common service stack? SVOD services plus pay TV. But even that is showing signs of change.

Consider:

  • The number of pay-TV-only HH declined to 12% in Q1 2019, compared to 16% a year earlier;
  • HH with pay-TV service and premium channels only decline to 4% from 6%; and,
  • HH with just premium channels remained flat Y/Y at 1%.

In contrast, the percentage of HH that also included SVOD in their content mix increased across the board:

  • HH subscribing to pay TV, a premium channel and SVOD services increased to 24% in Q1 2019 from 20% in Q1 2018;
  • HH with pay TV and SVOD services increased to 19% from 17%;
  • HHs with a premium channel and SVOD services increased to 6% from 4%; and, notably,
  • SVOD-only HH increased to 18% from 14% over the past year.

Delivery mix is changing quickly

In Q3 2017, meanwhile, Ampere found that – in a study of 11 countries – more than a quarter (26%) of HH were pay-TV only with just 17% saying they only used SVOD services. In Q3 2016, those numbers were 39% and 9% respectively and in Q3 2015, pay-TV-only HH made up 47% of the sample.

At the time, only Australia had more SVOD-only HH.

The combination of SVOD and pay TV first became dominant in Q1 2017, Ampere’s study of North America, Europe and Australia showed, with 38% of HH claiming they used both.

The bottom line

There’s no doubt pay TV continues to play a significant role in how TV is delivered – for the moment. In Poland, the Netherlands, South Africa and France, for example, the number of HHs with subscriptions to pay TV only remains higher than those with SVOD services only.

But SVOD has become a mainstay. Among the 16 countries in Ampere’s report, all show a significant SVOD-service mix. Thirteen of them – Turkey, the US, Denmark, the UK, Saudi Arabia, the Netherlands, South Africa, Canada, Spain, Sweden, France, and Germany – show HH with a pay-TV plus an SVOD subscription dominate.

As noted above, Japan, Australia and Italy have more HH with SVOD services only than pay TV only or a combo of pay TV and SVOD.

That’s not going to change. Content distribution is going to continue to move toward SVOD services.

Stay tuned.

Jim O’Neill is Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn