Video-on-demand (VOD) is absolutely dominating the whole media and entertainment sector. This is prompting distributors to come up with different ways to bundle and disseminate content, creating new revenue models, and opening up all kinds of opportunities to push the envelope on content creation. VOD market in solutions including Pay TV VOD, OTT videos and IPTV. Video-on-demand comprises quickly and comfortably free and paid programs from satellite TV, telephone and cable companies, as well as streaming services on the Internet, as PC Mag reports. VOD is becoming more and more strategic element of the global video enviroment and industry.
Picture 1: Global Internet video highlights (Cisco, KeyMedium)
What is VOD service in fact?
According to the OxfordDictionaries it is a system in which viewers choose their own filmed entertainment, by means of a PC or interactive TV system, from a wide available selection. Generally, Video on Demand, commonly denoted as VoD, provides consumers a way to watch their desired movies and television shows as per their own convenience. Definition by BroadbandNews explains that VoD services work similar to the DVR services, which enables users to record their favourite content (shows and movies) or pause it in order to watch it as per their convenience. VoD services are provided by OTT streaming service providers as per ‘pay per view’ business model. This enables users to avail their favourite content and pay for it as per their usage. VoD service enables users to access various type of movies and shows (irrespective of time) on demand. These include classic TV shows, television series, and movies from different decades, multi-ethnic entertainment, news, sports, and commercials. Although, VoD was originally started for movies access, with increasing demand to watch popular TV programmes including TV series and animated kids programs as per users’ convenience, VoD service providers expanded their offerings to include a diverse set of content programmes. (Future Market Insights).
Picture 2: Video on demand structure (ACMA)
VOD statistics 2017
Growth in data traffic always seems to be accelerating, and video makes up the bulk of it. According to Cisco, IP video traffic will be 82% of all consumer internet traffic globally by 2021. Some more dedicated predictions by Cisco illustrate the coming, massive consumption of video content:
- By 2021, a million minutes of video content will cross global networks every second.
- It would take more than 5 million years to watch the amount of video that will cross global IP networks each month in 2021.
- Consumer video-on-demand traffic will nearly double by 2021, to the equivalent to 7.2 billion DVDs per month.
In 2017, bandwidth dedicated to video traffic is expected to make up 74% of internet use. This fact, combined with other trends, leads us to believe that live streaming will continue to experience strong growth in 2017. Young internet users seem especially drawn to video, which gives us a glimpse of the future. On platforms like Snapchat, users watch over 10 billion videos per day and Facebook accounts for more than 8 billion video views from 500 million viewers per day. That market size alone is global in scope and game-changing in nature. The European VOD market is worth €4.2 billion in 2017, according to Italian research from ITMedia Consulting. In 2017-2020 company estimates the market will continue to grow by an average of 17% each year, reaching a revenue of €6.7 billion in 2020.
T-VOD (Transactional Video on Demand) will see its share of the market reduced, from 37% in 2017 to 27% in 2020. SVOD (Subscription Video-On-Demand) services will increase, thanks to the success of Netflix, Amazon, and the likes. The main markets are France, Germany and the UK. While constituting 40% of the total population (Western Europe), the three countries will account for 63% of the market for VOD in 2017, and 62% in 2020. These three markets will generate revenues of €2.7 billion in 2017, then climbing up to 4.1 billion in 2020 with an annual growth of 15%. MarketsandMarkets forecasts the VOD market to grow from $25.30 billion in 2014 to $61.40 billion in 2019, at a CAGR of 19.4% during the forecast period. In terms of regions, North America is expected to be the biggest market in terms of revenue contribution, while Asia-Pacific (APAC) and Middle East and Africa (MEA) are expected to experience increased market traction, during the forecast period.
Major forces driving this market are reaching audiences on any device, delivering best possible viewer experience, enabling time-shifting view, and unmatched scalability. VOD solutions helps the viewers to reach any connected device, offering a key competitive advantage in terms of consumer reach despite of various challenges involved such as diversified bit rates, operating systems, digital rights management (DRM) and multiple screen formats. As customers want to acquire large number of programs, they demand for high quality videos and this is where an emergence of OTT and IPTV occur. Therefore, TV no longer considers itself a push industry, because viewers are now pulling the content they require. As the TV experience is changing rapidly from a traditional linear TV, OTT viewers are surpassing IPTV viewers. The VOD providers are consolidating their grounds in the highly competitive market through mergers and acquisitions to build feature-rich solutions and attain better market visibility.
According to Zenith’s marekt research 2017 will be the peak year of fixed-device video, which global consumers will spend an average of 19 minutes a day viewing. Viewing on smart TVs continues to rise, but not rapidly enough to compensate for the decline in viewing on desktops and laptops, as consumers shift their attention to mobile devices. We forecast viewing on fixed devices to shrink 1% in 2018 and 2% in 2019. Meanwhile mobile video viewing – averaging 29 minutes a day this year – will grow 25% in 2018 and 29% in 2019, driven by the spread of mobile devices, improved displays and faster mobile data connections. By 2019, mobile devices will account for 72% of all online video viewing, up from 61% this year.
Source: BroadbandTVNews, DaCast, MarketsandMarkets, PCMag, Zenith
Cover graphic: BillsTV