Pay-TV and VOD spending to hit $314BN in 2017 | Media Analysis | Business
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The global consumer video media services market is ticking along steadily according to research from Gartner that predicts spending will total $314 billion in 2017, a 4.2% yearly rise.

Looking regionally, the emerging Asia/Pacific (20.8%) and Middle East and North Africa (17.4%) are forecast to record the highest growth in end-user spending on consumer video media services in 2017. The analyst points to notable success by China Mobile which began offering its pay-TV service free of charge to its premium subscribers for the first two years of a new contract. In addition to leading to an influx of new subscribers in the pay-TV marketplace, the move is thought to be also bolstering price competitiveness and putting negative pressures on the average revenue per user (ARPU) of the overall pay-TV market.

gartnerpiadvideo 6may2017The analysis suggests that pay-TV services will be the largest spending segment and is on pace to represent 90% of the total market, or $282 billion, at the end of 2017. That would be 2.4% annual growth. After a welter of drives by providers such as Netflix, the subscription video-on-demand (SVOD) market looks set for spectacular growth, 28%, to total $18.7 billion. The average consumer adoption of SVOD services is 10 percent in 2017, with an average ARPU of $7.41.

Transactional VOD revenues — derived mainly from the likes of Amazon, Google or Apple — are forecast to total $13.6 billion, up 15% compared with 2016.
Gartner expects that the availability of premium-priced 4K content will increase end-user spending on TVOD content in mature regions, from $160 million in 2017 to $400 million by 2020. It adds that in emerging regions, increased competition in the TVOD marketplace from unmanaged providers and increased threats of piracy will put negative pressure on TVOD prices. Gartner projects that end-user spending on TVOD services in emerging markets will decrease gradually each year, starting in 2017, by about $60 million to almost $445 million by 2020.

Yet of all the segments cited by the analyst, it is over-the-top VOD that the analyst seems especially enthusiastic about. “OTT-VOD sources are changing the landscape,” said Derek O’Donnell, senior research analyst at Gartner. “OTT-VOD services are the fastest-growing segment in the VOD landscape and eroding pay-TV providers’ share of revenue. OTT-VOD sources began outperforming traditional pay-TV sources in 2016.”

Furthermore, and as regards SVOD penetration, the Gartner research regards universal search as the key to driving further penetration, which will allow consumers to search for content across all their services. “This is a ‘holy grail’ in the industry as providers, such as Netflix and HBO don’t want to cooperate,” added O’Donnell. “Therefore, true universal search is still some years away. Currently, there is a market for niche subscription video services and established streaming providers. However, as the market matures, we forecast more consolidation around the fewer companies that can innovate and set themselves apart from the juggernauts within the industry.”

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