According to the latest report on the SVOD market from analyst firm Telsyte, revenues over the 12 months were up 90% and the firm is now forecasting that Australians will hold more than twice as many SVOD subscriptions — or 22 million — by the end of June 2022.
Telsyte also reports that streaming entertainment — delivered to Internet-connected devices such as smartphones, set top boxes, games consoles and smart TVs — is quickly becoming the mainstream way consumers view video content.
In total, the analyst firm estimates 43% of Australian households were subscribed to SVOD services at the end of June 2018, from around 30% a year ago. This compares to around 70% in the US and 60% in the UK, which Telsyte says shows the growth opportunity in Australia within the next few years.
However, according to Telsye, new services (e.g. Amazon Prime, Foxtel Now), and a growing list of popular sports and special interests are “collectively feeding Australian’s hunger for video content”.
New SVOD services, including potentially those from Disney, HBO and various sporting codes, are expected to appeal to even more audiences, Telsyte says.
Telsyte says its research shows Australians are increasingly comfortable with subscription-based entertainment services, with millions turning to subscriptions for SVOD, music (e.g. Spotify, Apple Music), and game console subscriptions (e.g. PlayStation Plus, Xbox Live Gold).
“The uptake of SVOD services is putting pressure on traditional pay TV, which is found in around one-third of Australian households (end of June 2018), a similar level to 2017. The growth of Fetch TV, that allows access to both SVOD and Pay TV content via its set top boxes, offset the decline in Foxtel subscriptions,” the report says.
According to Telsyte managing director Foad Fadaghi, the SVOD market is not showing signs of being “winner takes all”.
“Consumer are becoming comfortable with multiple subscriptions and are subscribing to different providers for exclusive content and live sports” Fadaghi says.
Telsyte sees sports as a big winner for SVOD.
“Australians’ love for sports has been a big driver for SVOD, with sporting codes like AFL, NRL, and netball (all exclusive to Telstra) showing strong demand, with usage exceeding the reported 1.5 million subscriptions in February 2018. Other popular niche services include UFC, NBA and MLB,” Telsyte comments.
And, despite the technical issues, Telsyte estimates more than two million Australians watched the FIFA World Cup in June 2018 via Optus Sport.
The analyst firm says unlimited broadband and generous mobile caps are underpinning SVOD consumption – and SVOD services are big drivers for data consumption across fixed broadband and mobile networks.
“Average monthly data usage on mobile and fixed broadband by SVOD users are both over 45% higher when compared to those that do not use SVOD,” Telsyte senior analyst Alvin Lee says.
According to Lee, SVOD depends on broadband connectivity, and as NBN and 5G wireless deployments continue, more Australians will be able to access streaming in 4K HDR quality, “which is fast becoming standard on new smart TVs, and is increasingly supported on other digital devices”.
The Telsyte research found one in six Australians streamed movies or TV shows in 4K HDR in the last 12 months and, amongst 4K TV owners, one in three streamed 4K HDR content, demonstrating what the analyst firm says is growing consumer appetite for higher video quality when available.
According to Telsyte, 4K TVs are already in some 15% of Australian households and penetration will grow to around 50% by 2022.
But, according to Telsyte, broadcast VOD growth is slowing.
The firm says growth in uptake of catch-up and live traditional TV streaming services — sometimes called Broadcast VOD (i.e. 7Plus, 9Now, tenplay, ABC iView, SBS On Demand) — has slowed down, with SVOD penetration on track to overtake it.
And Telsyte estimates there are 4.1 million households with SVOD services versus 5.2 million households with broadcast VOD.
“However, broadcast VOD and ad-free services, as in the case of ABC iView, continue to be an important channel for children’s content with more than 5.5 million children viewing these services, a 6% year-on-year increase,” Telsyte concludes.