Video on Demand (VOD) Services Market to Reach US$ 53 Billion by 2016

Video on Demand (VOD) services are changing the way content is produced and consumed. Smartphones powered with 24×7 internet have altered consumer viewing habits, with on-demand content gaining prominence over scheduled TV shows. It’s no wonder then that VOD service providers like Netflix, Amazon Prime, and Hulu are gaining millions of new viewers every year.

The global video on demand services market was valued at nearly US$ 49 bln in 2015. It is expected to gain US$ 4 bln in revenues in 2016, fuelled by rising adoption in key markets of US and UK. And, it is not only developed countries where on-demand bug has caught up – developing countries in Asia Pacific and Latin America too are witnessing an increase in VOD subscriptions.

VOD services are especially popular among the youth, and this demographic has been, and will remain crucial to the prospects of VOD in the future. People in the age group of 18 to 30 have been at the forefront of VOD adoption. They have now turned influencers, introducing their family and families to the VOD sphere.

Netflix, Amazon, and Hulu: The Big 3 

Subscription VOD service providers are working overtime to leverage on the enormous opportunities present in the market. Netflix has dished out an impressive line-ups of original content to its subscribers, whereas Amazon reportedly shelled out close to US$ 225 mln to get Jeremy Clarkson on board.

Netflix remains the largest SVOD company globally and in January this year, it simultaneously launched its services in 130 new countries. Currently, Netflix can be subscribed in over 190 countries. However, Netflix’s dominance of the SVOD market has come under pressure, owing to the increasing popularity of Amazon Prime and Hulu.

North America is the most lucrative market for video on demand services, driven primarily by immense popularity of these services in the US. The US remains the largest market for all three SVOD service providers.

US Remains the Hotbed of Video on Demand Services Market 

2016 hasn’t started on a very promising note for SVOD companies in the US, as a note from ITG’s Steve Weinstein has forecasted the subscriber base to be lower than expectations. The Wall Street and Netflix had expected the subscriber base in the third quarter to exceed 1.3 million, but according to Steve Weinstein, the subscriber base will be 1.13 million in the US.

Outside of the US, Europe is another lucrative VOD market, with Netflix and Amazon in 15% and 5% of British homes in 2015. According to UK regulator Ofcom, there were nearly 6 million subscribers SVOD service providers in the UK in 2015.

VOD services are at a nascent stage in Asia Pacific, but considering the region’s high population, a plethora of opportunities lie in the offing. Australia and India in particular are expected to offer growth opportunities to both domestic and foreign SVOD providers. In India, Balaji Telefilms Ltd – a leading producer of Hindi films and TV shows – has created its VOD platform ALT Digital Media. Its rival Viacom18 Digital Ventures is working tirelessly to launch its VOD service VOOT. Sensing the potential of the Indian market, Netflix too made a foray in the market in January this year.

The Asia Pacific VOD services market is expected to surpass US$ 8 billion in revenues by 2016, and it will be interesting to see how global VOD players act to leverage on the available opportunities. While some companies will skyrocket and some will lose ground, one thing is for certain that the VOD is here to last, and it can threaten the very existence of linear TV.

Suyog Keluskar

Suyog Keluskar is an experienced Market Research, Customer Insights & Consulting professional, covering latest industry and market updates on Electronics, Semiconductor and ICT domain. With over ten years of experience in business/market research, Suyog delivers customer-centric assignments in market-entry, market expansion, partner identification, competition analysis, market sizing, industry insights and customer intelligence studies. When Suyog is not busy unraveling the consumer mind or unearthing market potential he can be found traveling the road less traveled with a fascinating book on contemporary history in his hand. An avid cricket fan, music lover and you will also find him discussing politics with his friends and peers more often.