Tuesday, 08 December 2015 23:32

Ovum: SVOD boom not the death of Pay TV or Free TV

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If you think SVOD services such as Netflix, Presto or Stan will be the death of Pay TV of Free-to-Air (FTA) TV, Ovum says no.

Australian subscriptions to SVOD (streaming video on demand) services - such as the aforementioned Netflix, Presto and Stan - are set for strong growth over the next five years, according to analyst firm Ovum, with more detail in an 18-page PDF report for NBN Co, hosted at an NBN Co link (which you will find at the end of this article). 

Its forecasts say that subscriptions ‘will grow by a factor of 17 between the end of 2014 and the end of 2019.’

By the numbers, Ovum’s forecasts show that ‘SVOD subscriptions will rise from only 270,000 in December 2014 to hit 4.707 million by the end of 2019.’

David Kennedy, Ovum’s Research Director said: “SVOD services have been growing rapidly in Australia since the entry of Netflix in May this year. This has sparked strong competition from the Australian incumbents - the free-to-air and pay TV industries - that is driving takeup.”

So, what about the cannibalisation of Pay TV and FTA TV, or the lack of it? More below, please read on. 

However, Ovum does not expect cannibalisation of the existing pay TV or free-to-air subscriptions, though there will be pressure on profitability as competition for content pushes up the cost of licensing.

Kennedy concludes by stating: “SVOD, pay TV and free-to-air are distinct consumer propositions that meet different needs.

We expect SVOD to grow fast, but we also expect pay TV to maintain its dominance of sport and for free-to-air to remain popular because, well, it’s free.

“Consumers will mix and match these different services”.

Ovum’s detailed 18-page PDF report for NBN Co, dubbed ‘Australian OTT Video - Creating a New TV Market’ is freely downloadable via this NBN Co hosted link, and has more information.

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Alex Zaharov-Reutt

Alex Zaharov-Reutt is iTWire's Technology Editor is one of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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