Subscription video on demand (SVOD) services delivered over the Internet are proving so popular in Australia that they could be more popular than traditional pay TV services by the middle of next year.
According to a new study by technology analyst firm Telsyte, SVOD subscriptions in Australia reached 3.7 million at the end of June 2017, a year-on-year increase of 30%.
Telsyte’s Australian SVOD Market Study 2017 found almost half (49%) of Australian households currently subscribe to either pay TV or SVOD services, an increase from 38% in 2015. Only 11% of households currently have both pay TV and SVOD.
Telsyte predicts paid SVOD subscriptions are on track to overtake traditional pay TV subscribers by June 2018, as consumers increasingly consume content on-demand, and across multiple devices. Popularity of exclusive and original content, as well as live streaming, is expected to continue to the drive the market to 2021 when subscriptions are expected to exceed 6 million. Telsyte believes consumers will consider multiple providers, leaving room for services from Stan, Amazon, YouTube Red, Foxtel, Optus Sport, and a long list of others to encroach on Netflix’s market leadership.
Telsyte estimates that Netflix exceeded 2 million subscriptions in Australia at the end of June 2017, with Stan in second with 867,000, and others making up 769,000.
Telsyte says SVOD services are putting pressure on free-to-air (FTA) TV rivals and traditional pay TV, with around a third of pay TV subscribers also having at least one SVOD subscription, and 46% of SVOD subscribers claiming to “rarely” watch FTA TV. Telsyte research shows that the average SVOD subscriber watches nearly 26 hours of video content a week across FTA TV, pay TV, SVOD, online TV on demand (catch up TV and live streaming), and other video content sources (incl. non-streaming videos), compared to around 21 hours for the average Australian.
“SVOD adoption in Australia has started to reach a scale which has strategic significance to media and telecoms companies alike” says Telsyte managing director Foad Fadaghi.
Fueling the uptake of SVOD is the popularity of unlimited data services on the nbn and increases in mobile data caps, according to Telsyte. On average, SVOD subscribers typically use 61% more mobile data (3G/4G) than those who do not stream SVOD on smartphones. At the end of 2016, the rate of uptake of SVOD by nbn users was 25% higher than non-nbn users.
“SVOD bundling is an important loyalty driver when mobile and broadband prices are under pressure,” says Telsyte senior analyst Alvin Lee.