The Revenue Potential of The Pay TV and the SVOD Subscriber

Dimitar Serafimov | Tue Nov 21 2017 | Industry insights

SVOD in subscription economy

We are in the midst of an entertainment revolution. Both Pay TV and SVOD providers have seen interesting dynamics in their viewership and subscriber growth. 

In this post, we'll go through this subscriber dynamics via a couple of interesting charts.

As SVOD continues to develop, grow and dazzle audiences worldwide and Pay TV keeps its pole firmly in the ground of the televised entertainment landscape, we can expect to see incredible things in 2018.

Pay TV enjoy healthy revenue levels

As you can see from this new chart (from a recent Ampere Analytics report), while cable, satellite and IPTV revenues continue to grow through a higher average revenue per user (ARPU), the lower price point for OTT services translates to lower revenue coupled with steeper distribution costs:

pay tv vs svod revenue

Pay TV suffers most in North America, the cord-cutters Mecca

Now, despite these striking revenue trends, in certain parts of the world, cord-cutting is on the up, particularly in North America where the cord-cutter rules and the ARPU remain strong:

pay tv subs change per country

Now, while pay-TV operators in BRIC countries are picking subscribers, there have been notable declines in North America as well as mixed findings in the major European markets. The above chart displays the ARPU shown as monthly average revenue from pay TV services in pay TV homes.

The US case

And from these discoveries, something that's incredibly interesting is that according to a study from MoffatNathanson, the USA's growing subscriber gap is being filled, or bridged with OTT or multichannel video programming distributors (MVPDs):

pay tv subs growth in US

The new TV Tribes segmentation

Ampere's analysis also uncovered a set of new and emerging TV subscriber demographics, known as TV tribes.

Among these TV tribes were the Digitally Detached and TV Traditionalists. Middle-aged to old-aged, these tribes are the least likely to spend on indulge in SVoD or OTT offerings, sticking to more linear viewing mediums.

At the other end of the spectrum are the Content Connoisseurs and Broadcast Bingers. While the connoisseurs are wealthy, the bingers are budget viewers looking for the value of boxsets to keep them entertained. But, despite their differences, both of these tribes have one thing in common: they're younger and have a thirst for digital content.

What's really interesting is, the latter tribes boast a higher market share than their older counterparts, as the chart shows:

New TV tribes

It seems that while pay-TV is pulling in healthy revenues, its potential and relevance is dwindling while the possibilities and money-making opportunities for those operating in the SVoD realm are just beginning to hot up.

If you're an SVOD provider with a keen eye, a solid plan and your ear to the ground next year, and beyond, you have everything to gain.

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