SVOD industry battles with reeling global economy | Media Analysis | Business | News | Rapid TV News
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The  subscription video-on-demand (SVOD) market is facing threats from the impact of advertising tiers as well as the growing FAST sector but, says a study from Rethink TV, SVOD services will reach 1.9 billion subscribers in 2028 in a market worth $171.9 billion.
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In its Subscription Video on Demand Market Forecast 2023-2028 report, the analyst noted what it called a “wave of hysteria” in early 2022 after Netflix confirmed its first subscriber loss of 200,000 subs, or around 0.09% of its total. It added that in the year since, Netflix’s return to growth and confirmation of its advertising strategy has largely set the market at ease.

Yet it says that complicating its analysis of the market is the fact that the industry is about to enter a phase where SVOD services have ad-supported customers, AVOD services have subscription tiers, and FAST provider will “undoubtedly start playing” with on-demand video. Rethink also believes that the clock is also ticking until these VOD services have live linear feeds, and Netflix is due shortly to launch its first live stream.

Observing that both Disney and Netflix are now in the early stages of their advertising expansion, and that both have chosen to price their ad-supported bundles at a slight discount to ensure that they can maintain their ARPU via the ads served, Rethink said that it suspects SVOD platforms could see significant lifts in ARPU via advertising.

That said, the report stressed that neither Netflix nor Disney have opted for an entirely free tier, supported by a much heavier advertising load. This it regarded as significant because the issue of account sharing has raised its head in the past year.

The analyst remarked that with free options, SVOD services would be able to migrate a user from an existing SVOD subscription and into a free account with only an email address and basic account details. While this would serve to keep the number of subscribers high, and potentially provide a significant boost if the estimates of ‘freeloader’ accounts are as high as some in the industry maintain, as soon as a payment method was required, the success of converting a freeloader into an active subscriber would plummet.

In conclusion, the analyst warned that even thoughNetflix would likely continue to be vocal about its profitability, ARPUs across the SVOD industry in general need to rise and that advertising was going to play a major role in this regard.