SVOD spending in the US has grown strongly for the last decade. But with the industry entering its mature phase, will spending continue to increase? We discuss the many factors affecting it.
Top news stories (1:40)
What will happen to SVOD revenue in the (5:50)
Ampere Analysis was misquoted in some news stories as saying that SVOD growth may have peaked in the US and spending would decline. What the company actually said was that overall video spending in the US had peaked and would decline. However, that set Will and me thinking about what would happen to SVOD spending over the next several years. We discussed the following factors.
Factor 1: SVOD penetration (7:20)
Kantar Media says penetration has reached 89% in the US. If so, SVOD penetration is now more deeply penetrated than traditional pay TV ever was. Cable, satellite, and telco TV penetration peaked in 2013 at 88.3% and is definitely on the way down. This year, it looks like penetration will fall below 50% for the first time in decades.
Factor 2: The number of subscriptions per person is increasing (8:40)
The number of SVOD services we subscribe to keeps on growing. TiVo’s latest Video Trends Report shows that between Q4 2021 and Q4 2022, the number of paid services we have increased by 1.1 to 7.6. That includes traditional pay TV and vMVPDs, but most of the total comprises SVOD services.
Factor 3: SVOD prices (12:00)
Will points out how much people spend is a simple equation: price x quantity. TiVo data shows that the quantity is increasing, and Will says the price will always go up.
Factor 4: The impact of FASTs (13:00)
FAST services now appear to be impacting people’s time using SVOD services. Could FASTs replace some of the need for SVOD services?
Factor 5: How fast traditional pay TV declines (16:50)
If the traditional pay TV industry continues to contract as fast as it did in 2022, it will free up much money that could be spent on SVOD.
Factor 6: The impact of sports (18:30)
As sports appear in streaming services, like MLS on Apple TV, they should be regarded as sports SVODs. Sports continue to transition to streaming, which will also bring money from traditional pay TV.
Factor 7: Content budgets are shrinking (21:30)
Services are cutting back on the amount of money they spend on content. However, they continue to spend a lot, and there will continue to be a strong flow of new content into SVOD services.
Factor 8: The role of technology (24:10)
The technology could also impact the revenue earned by SVOD services. We discuss some of the ways that could happen.
