US video streaming shows first signs of saturation but Ultra HD on the rise | Media Analysis | Business | News | Rapid TV News
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Research from Strategy Analytics has succinctly described the ascendency of streaming video in the US while noting that Ultra HD is indeed the next new kid on the block.

Strat ANalys 26 MayIn two simultaneously announced reports, the analyst has revealed the first indicators that the US video streaming market is approaching saturation and has also predicted that more than 11 million North American homes will own an Ultra HD TV by the end of 2016 as prices drop to increasingly affordable levels.

With regard to the former, Strategy Analytics forecasts that US consumers will spend $6.62 billion on video streaming services such as Netflix, Amazon Prime and Hulu in 2016. The 22% increase in streaming subscription revenue means the format will account for over a third of US consumer spend on home video in 2016. Even though this represents a $1.19 billion (or 22%) increase on 2015, the analyst noted that it’s the first time ever that the absolute increase in the amount people spend on such services will be lower than the previous year’s increase. For 2015 the increase was $1.21 billion.

Moreover, argued Strategy Analytics digital media director Michael Goodman, the change in increase may be relatively small, but its direction was extremely significant in a market where nearly three-fifths of broadband households subscribe to a video streaming service. “It shows that, whilst actual market saturation is a few years off yet, the domestic US streaming subscription market is now on the backside of the adoption curve. The incremental increase in annual dollar spend will decline from here on. We put market saturation at 85% of broadband households – similar to saturation levels for pay-TV. Within five years, annual growth will fall below 8%.”

Looking at other trends regarding the streaming market revealed in the report, Strategy Analytics found that market leader Netflix accounted for just over half (53%) of subscriptions, more than double the share of second-placed Amazon Prime Video (25%) with Hulu in the distance with 13%. Yet it was also notable that almost two-fifths of US households subscribing to a video streaming service, subscribe to at least two.

“This multi-subscription behaviour means growth relies on cannibalising other services or getting people to subscribe to more than one – and companies seem to be betting on the latter,” added Goodman. “Most of the new services being launched today are in the $2-$5 range – clearly designed to be complementary to a Netflix or Amazon. The domestic situation is also a huge reason why international expansion is so important, this is underscored by Amazon’s recent video initiatives, and is particularly relevant for Netflix who has the least room to grow in the US.”

Also set to grow is the US Ultra HD market which will be driven not just by falling prices but wider availability of models. The result will be 72% shipment growth in the region this year and the analyst expects that by 2020, all 40” or larger TVs being sold in North America will be Ultra HD models. It predicts that by this stage half of all homes in the region will own at least one Ultra HD TV.** Another key trend discovered by the analyst in its report was that over 80% of all Ultra HD TV shipments in 2015 were 50” or larger displays and that 1080p screens were starting to disappear entirely from large screen product line-ups.

Remarked David Watkins, director of Strategy Analytics’ connected home devices service: “2160p resolution has almost become a given in the large screen TV market and attention is now turning to other attributes that fall under the Ultra HD umbrella such as high dynamic range, wide colour gamut and high frame rates. A high proportion of mid to high-end Ultra HD TVs sold this year will support HDR which in combination with higher resolution and enhanced colour representation will deliver a significant step change improvement to the TV viewing experience beyond resolution alone.”