SVOD uptake hammering pay TV – IHS

The uptake of subscription video services like Netflix, Hulu and Amazon Prime Video was three times that of pay TV services last year, according to IHS Markit.

The research firm said that while digital pay TV subscriptions grew on a global basis, in Western Europe there were eight new over-the-top (OTT) video subscriptions for every pay TV net addition in 2017.

In Asia Pacific there were three new OTT subscriptions for every new pay TV subscription, driven by an increase in smartphone penetration, improvements in mobile data accessibility and affordability.

Meanwhile, in Central and Eastern Europe the number of OTT and pay TV net additions were found to be roughly equal.

IHS also tipped OTT penetration in the Middle East and Africa region to grow rapidly in the coming years, despite remaining low currently, as international and local players partner with local operators and telcos.

“Although pay TV reached a new high, OTT net subscriber additions outstripped net pay TV subscriptions in most regions globally,” said Fateha Begum, associate director of television media at IHS Markit.

According to the research, global digital pay TV subscriptions – including cable, satellite and IPTV – exceeded one billion for the first time in 2017.

However, the Asia-Pacific region accounted for 83% of these additions, driven by IPTV growth in China.

In North America, digital pay TV subscriptions declined by three million homes last year while OTT subscriptions increased by nearly 30 million.

“Pay TV services in North America continue to be affected by cord cutting, primarily due to higher average prices for pay TV subscriptions, compared to other global regions,” said Begum.

Irina Kornilova, principal analyst of home entertainment, IHS Markit, added: “We expect to see OTT subscriptions growing globally over the next five years, as Amazon and Netflix continue to invest in local and localised content, and as virtual pay TV operators start to appear and grow outside the US.”