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US SVOD subscriptions to reach 208 million

The number of SVOD subscriptions in the US will climb from 132 million in 2017 (111.5% of TV households) to 208 million in 2023 (173.0% of TV households).

SVOD subscribers by operator (000) 250,000

200,000

150,000

100,000

50,000

0 2017 2023 Others 1,967 11,484 YouTube TV 325 3,334 Instant 0 417 Hulu Live 450 3,959 PlayStation Vue 550 688 DirecTV 1,155 5,417 Sling TV 2,212 3,542 Play 1,908 4,167 CBS All Access 2,500 5,700 Showtime 2,500 5,700 HBO Now 4,144 7,918 Hulu 16,503 28,129 Amazon 44,992 60,581 52,810 67,326

Source: Digital TV Research

Simon Murray, Principal Analyst at Digital TV Research, explained: “Our SVOD subscriber forecasts are gross. Many homes pay for more than one SVOD service. We believe that this proportion will rise as more platforms establish themselves.” The North America OTT TV & Video Forecasts report estimates that 73.5% of TV households (88.5 million) will subscribe to at least one SVOD platform by 2023. The average SVOD household will pay for 2.35 SVOD platforms.

This compares to 55.0% of TV households (65.1 million) subscribing to at least one SVOD platform by end-2017. The average SVOD sub paid for 2.03 SVOD platforms by end-2017.

Murray continued: “Our SVOD forecasts include homes watching as part of their Amazon Prime subscription. We have included half the Amazon Prime fee as an SVOD subscription to Amazon Video homes, even though homes are not directly paying for Amazon Video.”

North America OTT TV & Video Forecasts

Table of Contents

Published in August 2018, this 76-page PDF and excel report covers movies and TV episodes. The report comes in three parts:

• Outlook: Subscriber forecasts and bullet points for Canada and the US in a visually-appealing 13-page PDF document; • Excel workbook covering each year from 2010 to 2023 by household penetration, by SVOD subscribers and by OTT revenues for movies and TV episodes. As well as summary tables by country and by platform; • Insight: Detailed country-by-country analysis in a 25-page PDF document.

For more information, please click here or contact [email protected]

Forecasts for the following 19 platforms across 2 countries:

Country SVOD SVOD Platforms ops Canada 6 Netflix; Amazon Prime Video; CraveTV; Illico; Fibe Alt TV; CBS All Access USA 13 Netflix; Amazon Prime Video; Hulu; HBO Now; Showtime; CBS All Access; Starz; Sling TV; DirecTV Now; PlayStation Vue; Hulu Live; Xfinity Instant TV; YouTube TV

Canada OTT TV & video forecasts

Revenues by source ($m) 3,500

3,000

2,500

2,000

1,500

1,000

500

0 2017 2018 2019 2023 SVOD 737 983 1,144 1,740 DTO 142 161 180 251 Rental 96 105 113 143 AVOD 363 424 491 818

• OTT revenues for TV episodes and movies will reach US$2.95 billion in 2023, more than double the US$1.34 billion recorded in 2017.

• Canada will add US$1 billion in SVOD revenues between 2017 and 2023 to take the total to US$1,740 million.

• AVOD revenues will more than double between 2017 and 2023.

Canada OTT TV & Video Forecasts

SVOD subscribers by operator (000) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2017 2018 2019 2023 Others 150 200 289 529 CBS All Acces 0 53 62 92 Fibe Alt TV 41 105 125 184 Illico 362 452 525 625 CraveTV 1,193 1,470 1,687 2,260 Amazon 358 1,443 2,542 6,722 Netflix 6,126 6,781 7,264 7,962

• The number of SVOD subscribers will increase by 10 million between 2017 and 2023 to 18.38 million.

• About 57.5% of TV households subscribed to an SVOD platform by end- 2017. This proportion will reach 123% by 2023, with many homes subscribing to more than one platform.

• Netflix will account for 43% of the 2023 total; having added 1.8 million subs since 2017.

• We forecast 6.72 million Amazon Prime Video subs by 2023, up from only 358,000 at end-2017.

• We have assumed that 70% of Amazon Prime subscribers watch Amazon Prime Video. We have devoted half the annual fee to video for these homes.

Canada OTT TV & Video Forecasts

SVOD revenues by operator ($m) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2017 2018 2019 2023 Others 8 7 15 29 CBS All Access 0 1 3 5 Fibe Alt TV 10 35 55 86 Illico 31 37 44 64 CraveTV 71 125 148 207 Amazon 6 28 61 195 Netflix 612 751 817 1,154

• Canada will add US$1 billion in SVOD revenues between 2017 and 2023 to take the total to US$1,740 million.

• Netflix will command two-thirds of the 2023 total.

• Despite having far fewer subscribers, CraveTV’s revenues will stay ahead of Amazon Prime Video.

• As well as plenty of local content, CraveTV has content distribution deals with HBO, Showtime and Starz.

Canada OTT TV & video forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Population (000) Total households (000) TV households (000) Fixed broadband hholds (000) Smartphone subscribers (000) Tablet subscribers (000)

TV HH/Total HH Fixed broadband HH/Total HH Smartphone subs/Population Tablet subs/Population

OTT TV & video fixed broadband households (000) OTT TV & video HH/Fixed broadband HH OTT TV & video HH/TV HH

OTT TV & video smartphone subs (000) OTT TV & video HH/smartphone subs

OTT TV & video total (000)

SVOD subscribers (000) SVOD/TVHH % SVOD/fixed broadband % SVOD/smartphone %

TV rental transactions (000) Movie rental transactions (000) Total rental transactions (000) TV DTO transactions (000) Movie DTO transactions (000) Total DTO transactions (000)

Online advg total (US$ mil.)

Canada OTT TV & video forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

OTT advg (US$ mil.) Online TV rent revs (US$ mil.) OTT movie rent revs (US$ mil.) Online rental revs (US$ mil.) DTO TV revenues (US$ mil.) DTO movie revenues (US$ mil.) DTO video revenues (US$ mil.) SVOD revenues (US$ mil.) OTT TV & video revs (US$ mil.)

SVOD subscribers by operator (000) Netflix Amazon Prime CraveTV Illico Fibe Alt TV CBS All Access Others

Share of SVOD subscribers by operator (%) Netflix Amazon Prime CraveTV Illico Fibe Alt TV CBS All Access Others

SVOD revenues by operator (US$ mil.) Netflix Amazon Prime CraveTV Illico Fibe Alt TV CBS All Access Others

Share of SVOD revenues by operator (%) Netflix Amazon Prime CraveTV Illico Fibe Alt TV CBS All Access Others

Canada OTT TV & video insight

• OTT revenues for TV episodes and movies will reach US$2.95 billion in 2023, more than double the US$1.34 billion recorded in 2017. AVOD will contribute US$818 million in 2023, up from US$363 million in 2017.

Main assumptions behind the forecasts • About 57.5% of TV households subscribe to an SVOD platform. This proportion will reach 123% by 2023, with many homes subscribing to more than one platform. • Netflix is well established. • Amazon Prime has a strong following. • CraveTV also has national coverage. As well as local content, Crave has content distribution deals with HBO, Showtime and Starz. • There has been little vMVPD activity but this is about to change. • The same is true in the D2C sector. • Fixed broadband, smartphone and tablet penetrations are all high. Source: Digital TV Research

• Canada will add US$1 billion in SVOD revenues between 2017 and 2023 to take the total to US$1,740 million. The number of subscribers will increase by 10 million over the same period to 18.38 million. Penetration will climb from 57.5% the TV households in 2017 to 123.0% by 2023 as multiple SVOD subscriptions become commonplace.

• Although there has been a considerable improvement, Canada’s choice of SVOD platforms is much more limited than in the US. This is partly due to some of the major studios signing long-term exclusive deals with pay TV operators.

• Netflix launched its Canadian version in September 2010. We estimate that the company had 6.13 million subscribers by end-2017, growing to 7.96 million by 2023. The Canadian operation became profitable after less than two years of trading. As well as online, Netflix is available to Shaw, Rogers, Cogeco, Bell Fibe, MTS and Telus Optik TV (including 4K content) subscribers. Prices were raised in October 2017 to C$8.99-13.99/month.

• Amazon Prime (C$79/year, US$59.40) started in Canada in January 2013. Amazon Prime Video began operations in November 2016 – it is to Amazon Prime subscribers. Some of its content is licensed to other Canadian companies, so Amazon has little original content on offer at present. Therefore, 2017 was a soft-launch year for the platform, with more original content added from 2018.

• We forecast 6.72 million Amazon Prime Video subs by 2023, up from 358,000 at end-2017. We assume that 70% of Amazon Prime subscribers watch Amazon Prime Video and we devote half the annual fee to video for these homes. Amazon Channels is not yet available in Canada but we expect that it will launch during 2018.

• Bell Media launched CraveTV in December 2014. It offers 11,000 hours of content (of which two-thirds is exclusive) for C$9.99/month (up from C$8/month in early 2018). Bell reported that CraveTV had 1.3 million subs by end-2017 (not all payers). We forecast 2.26 million subs by 2023.

• CraveTV was also available to Eastlink, Telus and Bell Aliant subscribers – but not to non-subscribers to any of these operators. However, this changed in January 2016 when the service became available nationally, with Shaw subs gaining access in March 2016. Netflix is available to Fibe subscribers despite Bell running the rival Crave.

• Bell acquired broadcaster CTVglobemedia in April 2011, giving it control of 30 pay TV channels. Bell has exclusive rights to HBO content so the chances of HBO Now starting in Canada are slim at present. Bell also has exclusive Canadian rights to Showtime and Starz premium content.

• CBS All Access (C$5.99/month without ads) started in Canada in April 2018. CBS has licensing deals with several Canadian broadcasters, although 7,500 episodes are on offer online. We forecast 92,000 subscribers by 2023.

• NBC Universal’s Hayu plans to start in Canada before end-2018. Hayu concentrates on reality shows, with more than 5,000 episodes and 150 series.

• We believe that Canada will be a key market for Disney’s platform in 2019.

• Sony’s AVOD platform ceased operations in June 2018.

• Bell started its OTT platform, Fibe Alt TV, in May 2017. Alt TV allows users to watch live and on-demand content without the need to subscribe to a pay TV platform or to own a settop box. However, users must subscribe to Fibe internet. We forecast 184,000 subscribers by 2023.

• There are up to 500 channels on offer. The basic package offers 49 channels for C$14.95/month, with the option to add 10 more channels for C$24.95/month. The top pack of 152 channels costs C$106.95/month. There are also 10 sports packages. HBO costs C$20/month. CraveTV is also available.

• Bell TV had 2.83 million TV subscribers by end-2017. Bell is deliberately trying to convert its satellite subscribers to its more lucrative broadband networks. Launched in September 2010, Bell had 1.55 million IPTV subs by end-2017. The company passed 9.2 million premises with its fiber network by end-2017. Bell had 9.17 million mobile and 3.79 million fixed broadband subs by end-2017.

• Some operators provide free online access to their pay TV subscribers. Shaw provides Free Range TV, with up to 80 channels. However, it is only offered as a free service to traditional pay TV subscribers.

Club Illico subscribers June 2013 48,100 December 2013 58,200 December 2014 177,700 December 2015 257,500 December 2016 314,700 December 2017 361,600 March 2018 383,400 Source: Videotron

• Launched in 2012, Videotron operates French-language SVOD platform Club Illico (4,000 titles for C$9.99/month), which had 383,400 subscribers by March 2018. We forecast 625,000 subscribers for Illico by 2023. About 22% of the population are French speaking.

• Quebec-based Videotron had 1.63 million cable TV subscribers by March 2018; a figure that has been slowly falling for some time. Offering quad-play bundles, the operator launched a 200Mbps broadband service over its DOCSIS 3.0 network in May 2012. Videotron is owned by Quebecor Media, which also controls TVA, the largest French-language producer and broadcaster in Canada.

• Pay TV operators Rogers and Shaw launched the SVOD platform (19,000 hours of TV (with an emphasis on Canadian output) and movie content for C$8.99/month) in November 2014 – initially to their existing pay TV subscribers. In August 2015, shomi became available to all of Canada’s broadband subs. However, the platform closed down in November 2016 – just two years after launch, with 900,000 users (including payers and non-payers).

• However, Rogers has not abandoned OTT. Its City Video platform represents its FTA channel. Now provides online access to the premium channel.

• Operating mainly in the East, Rogers had 1.72 million basic TV subscribers by mid-2018; down by half a million subs since 2011 – and despite passing half a million more homes. Its broadband service offers speeds up to 1Gbps. Rogers will launch a network based on ’s X1 technology in early 2018. Rogers also has 10.63 million mobile subscribers.

• Mainly serving the Western provinces, Shaw had 1.62 million basic residential cable TV subscribers by May 2018. Similar to Rogers, overall cable TV subs numbers are falling, although Shaw appears to have put the brakes on the decline. Shaw also had 1.32 million mobile subs by May 2018.

• Shaw is rolling out its BlueSky TV network based on Comcast’s X1 technology. Shaw also runs 19 pay TV channels. Shaw has a distribution deal with Netflix.

• Ontario and Quebec-based Cogeco Connexion had 699,554 digital TV subscribers at May 2018. The total has been falling since 2011. The company has upgraded most of its network to DOCSIS 3.0, offering broadband speeds of up to 250Mbps as well as TiVo (with Netflix integrated) since October 2014. Cogeco is the only large cable operator not to offer mobile.

• Canada had 2.80 million paying IPTV subs at end-2017. IPTV is shaking up the pay TV sector, with four main operators (Manitoba Telecom Services (Acquired by Bell in early 2017. Offers Netflix and Crave), SaskTel (Max, started in 2002), Bell TV (Fibe TV) and Telus TV (Optik TV, with Netflix and Crave both options). Telus also has satellite TV subs in Alberta and British Columbia. Telus had 8.91 million mobile and 1.74 million fixed broadband subscribers by end-2017.

Residential subscribers by internet download speeds (%) 2010 2011 2012 2013 2014 2015 2016 Up to 256kbps 0.3 0.4 0.3 0.3 0.2 0.0 0.0 300-1400kbps 5.8 4.3 2.6 2.7 1.9 1.0 0.7 1.5-4Mbps 24.2 24.6 18.2 7.3 3.7 2.9 2.1 5-9Mbps 45.3 45.6 41.3 32.8 26.9 23.4 19.9 10-15Mbps 22.4 15.6 10.1 25.6 25.6 24.1 22.4 16Mbps+ 2.0 9.5 27.2 31.4 41.7 48.6 54.9 Total subs (000) 10,375 10,672 10,992 11,251 11,631 12,019 12,301 Source: CRTC

• Public broadcaster CBC has a significant online presence, including 1,500 hours of live streaming on an annual basis. CBC also provides 15 digital series. CBC charges C$4.99/month for its streamed TV feed and C$6.95/month for its news and sports platform. FTA rival Global TV has enjoyed success with its Global Go platform. Global is owned by .

• started an AVOD platform in mid-2018, with content from the likes of , MGM, and Warner Bros. There is little original content.

Digital TV Research publication schedule for 2018 Title Publication Price 1 Sub-Saharan Africa Pay TV Forecasts January £1200/€1440/$1560 2 Middle East & North Africa Pay TV January £1200/€1440/$1560 Forecasts 3 Asia Pacific Pay TV Forecasts April £1200/€1440/$1560 4 Latin America Pay TV Forecasts March £1200/€1440/$1560 5 North America Pay TV Forecasts March £500/€600/$650 6 Eastern Europe Pay TV Forecasts March £1200/€1440/$1560 7 Western Europe Pay TV Forecasts March £1200/€1440/$1560 8 Global Pay TV Subscriber Forecasts April £1500/€1800/$1950 9 Global Pay TV Revenue Forecasts April £1500/€1800/$1950 10 Global Pay TV Operator Forecasts April £1500/€1800/$1950 11 Pay TV Subscriber Prospects May £800/€960/$1040 12 Pay TV Revenue Prospects May £800/€960/$1040 13 vMVPD and D2C TV Forecasts May £900/€1080/$1170 14 Netflix Forecasts May £700/€840/$910 15 Sub-Saharan Africa OTT TV & Video £1000/€1200/$1300 Forecasts June 16 Middle East & North Africa OTT TV & Video July £1000/€1200/$1300 Forecasts 17 Asia Pacific OTT TV & Video Forecasts July £1000/€1200/$1300 18 Latin America OTT TV & Video Forecasts August £1000/€1200/$1300 19 North America OTT TV & Video Forecasts September £500/€600/$650 20 Eastern Europe OTT TV & Video Forecasts October £1000/€1200/$1300 21 Western Europe OTT TV & Video Forecasts October £1000/€1200/$1300 22 Global OTT TV & Video Forecasts October £1800/€2160/$2340 23 Global SVOD Forecasts November £1500/€1800/$1950 24 OTT TV & Video Prospects November £1000/€1200/$1300 25 SVOD Prospects December £900/€1080/$1170

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