Posted on: Aug 14, 2019

The Digital Video Content Market

Reading Time: 3 minutes

Considering how content creation, distribution and consumption is disrupting television, coupled with the fact that the internet is on its way to taking over television as the most preferred mode of consuming content, it is only fitting to state that content indeed is king. No surprise then that the digital video content market is thriving like never before. As per a latest market research report by Technavio, the global digital video content market is expected to grow at a cumulative annual rate (CAGR) of 3% from 2019-2023. Let’s have a look at some of the key trends that will lead the transformation of this industry:

Digital video content is an evolving industry and recent times have seen a number of players emerging in the market with a variety of different offerings and monetization models. Subscription video on demand (SVOD) remains the most popular model, with consumers spending the most on SVOD services such as Netflix and Amazon Prime, attributing to 51% of global spends. Ad-based video on demand (AVOD) is pretty popular as well. As is digital rental and electronic sell-through i.e. Transactional video on demand (TVOD).

Talking about subscription services, current analytics show an upward graph as far as consumer spends in this category are concerned. Back in 2017 itself, SVOD services made up for 39% of the global OTT video market, contributing to a whopping 51% of the overall 46$ billion revenue from various video content formats. Over the last two years, this has led to more and more conventional media houses adopting digital video content models to ensure they keep up with the times and cashing in on the demand for OTT content.

We foresee favourable growth prospects ahead – we’re talking increasing investment, growing audiences, number of platforms and amount of content! That said, this prediction cannot be generalized across the world. Believe it or not, the growth of SVOD has already started to see a decline in regions where it is more established. In a logical chain of events, as digital video content eventually matures in all markets, there is bound to be stabilization, likely to be followed by a decline in growth. Perhaps that explains why this July, Netflix’s subscriber count dropped for the very first time in years, causing its stock to tumble.

Even so, there is no doubt that Netflix is ruling the world of SVOD, for now. The future, however, is a big question mark at the moment. It’s undoubtedly commendable that even with a high price structure that is considered as expensive in some markets, Netflix holds a huge chunk of the digital video content share in various markets, while working on consolidating its place in various others.

However, this coveted position comes with its own shares of threats, including price-savvy competitors. While Amazon Prime video stands as its global competitor, there are other region specific ones too, like Hulu and Ruku in AmericaDisney and WarnerMedia too are planning to launch their aggressively-priced SVOD services later this year, as are a host of other providers, across the globe.

Consolidation and partnerships in the market are changing the face of the game like never before. With the increasingly intensifying competition, more and more companies are getting into partnerships to deliver custom content. Regional players are entering into alliances with MNCs – for example, Vodafone’scustom data offerings for SVOD services like Amazon Prime Video and Netflix in the UK.

A number of providers are also opting to offer attractively priced ‘TV services’ packages lower than those offered by the traditional players – Hulu is offering its video streaming services along with a package of 40 channels for consumers looking for a bundled offering at a better price. Then there is Apple who’s Apple+ TV launch is most widely awaited considering its stature and valuation. While there isn’t much that’s known about it, it will surely have an impact in terms of disrupting the market further.

From the looks of it, the industry has a lot of room for both global and local players with a huge opportunity for various models. We can’t wait to see how this unfolds for the providers as well as the consumers.

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