North America OTT TV & Video Forecasts
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North America OTT TV & Video Forecasts Table of Contents Published in August 2017, this 74-page PDF and excel report combines the relevant countries from two of last year’s reports: North America OTT TV & Video Forecasts and North America SVOD Forecasts in one convenient place. Covering movies and TV episodes, the report covers Canada and the US. The report comes in four parts: • Executive summary and regional forecasts, with handy comparison tables to reveal the best growth prospects; • Regional forecasts summary from 2010 to 2022 by platform, by household penetration, by SVOD subscribers and by OTT revenues for movies and TV episodes; • Country profiles for Canada and the USA; • Detailed country forecasts for Canada and the USA. For more information, please click here or contact [email protected] Forecasts for the following 14 platforms across 2 countries: Country SVOD SVOD Platforms ops Canada 4 Netflix; Amazon Prime Video; CraveTV; Illico USA 10 Netflix; Amazon Prime Video; Hulu; HBO Now; Showtime; CBS All Access; Starz; Sling TV; DirecTV Now; PlayStation Vue SAMPLE: Canada OTT TV & video briefing • OTT revenues for TV episodes and movies will reach US$2 billion in 2022, up from US$1 billion in 2016. Online advertising on OTT sites will contribute US$625 million in 2022, up from US$289 million in 2016. Main assumptions behind the forecasts • Given several launches, we have substantially increased our SVOD forecasts since the last edition. Penetration will climb from half the TV households to three- quarters by 2022, although this is gross penetration (some homes will subscribe to more than one platform). • Nearly half the homes subscribe to an SVOD platform, but there is plenty of growth left for the sector – although it will not reach US levels. • Netflix is well established. • Shomi now has national coverage, and it is given away free to top bundle subscribers to Shaw and Rogers. • However, several launches have taken place, including Amazon Prime Video which will have a major impact on the SVOD sector. • CraveTV also now has national coverage. Crave increased its prices substantially – pushing up our revenue forecasts Source: Digital TV Research • SVOD revenues will double from US$548 million (6.82 million subs) in 2016 to US$1,008 million (11.39 million subs) in 2022. Penetration will climb from half the TV households to three-quarters by 2022, although this is gross penetration (some homes will subscribe to more than one platform). • Unlike its southern neighbor, the Canadian government has reaffirmed its commitment to net neutrality. However, the government is considering a sales tax levy on digital platforms such as Netflix. • Although there has been a considerable improvement in recent months, 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 the Canadian version of its subscription service in September 2010. We estimate that the company had 5.66 million subscribers by end-2016, growing to 7.01 million by 2022. The Canadian operation became profitable after less than two years of trading. • As well as online, Netflix is available to Rogers, Cogeco, Bell Fibe, MTS and Telus Optik TV (including 4K content) subscribers. The middle tier price for new subscribers was increased to C$9/month in October 2015. A further price rise was announced in August 2017 to C$8.99-13.99/month. • Netflix offers much less content choice in Canada than the US. This led to a significant number of Canadian homes illegally subscribing to the US version of Netflix. However, Netflix has clamped down on this usage. • Amazon Prime (C$79/year, US$59.40) started in Canada in January 2013. Amazon Prime Video started in November 2016 – free to Amazon Prime subscribers. However, some of its content is licensed to other Canadian companies, so Amazon has little original content on offer at present. Amazon claimed that its Prime memberships grew by 80% in 2016 without giving a figure. • We forecast 2.13 million SVOD subs by 2022 – or 18.7% of the total. We assume that 70% of Amazon Prime subscribers watch Amazon Prime Video and we devote half the annual fee to video for these homes. However, we believe that 2017 will be a soft-launch year for the platform, with more original content added from 2018. • Bell Media launched SVOD platform CraveTV, which offers 11,000 hours of content (of which two-thirds is exclusive) for C$8/month (up from C$4/month on launch). HBO and Showtime content, such as Billions and Ray Donovan, were added later. Original content includes Letterkenny and What would Sal do? • Bell stated that CraveTV had 1 million users by September 2016 (not all payers). We forecast 1.57 million paying subscribers by 2022. Launched in December 2014, the service became 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 launched nationally, with Shaw subs gaining access in March 2016. • Bell start its OTT platform, Fibe Alt TV, in May 2017. Alt TV allows users to watch live (up to 500 channels) 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. The basic package offers 30 channels for C$14.95/month, with the option to add 10 more channels for C$20/month. Sports channels cost a further C$25/month, with HBO at C$20/month. • Bell TV had 2.82 million TV subscribers by mid-2017. Bell is deliberately trying to convert its satellite TV subscribers to its more lucrative broadband networks. Launched in September 2010, Bell had 1.48 million IPTV subs by mid-2017. Bell had 8.90 million mobile subscribers by then. The company hopes to pass 8.4 million premises with its fiber network by end-2017. • Bell acquired FTA broadcaster CTVglobemedia in April 2011, giving it control of 28 pay TV channels. Bell has exclusive Canadian rights to HBO content. Netflix is available to Fibe subscribers despite Bell running the rival CraveTV. • Bell’s exclusive rights to HBO content until 2018 the chances of HBO Now starting in Canada are slim at present. • CBS All Access (US$5.99/month with ads or US$9.99/month without ads) announced plans to start in Canada in 1H18. However, CBS has licensing deals with several Canadian broadcasters, so it is not clear what titles will appear on the SVOD platform. Club Illico subscribers June 2013 48,100 December 2013 58,200 December 2014 177,700 December 2015 257,500 December 2016 314,700 June 2017 337,600 Source: Videotron • Launched in 2012, Videotron operates French-language SVOD platform Club Illico (4,000 titles for C$9.99/month), which had 337,600 subscribers by June 2017. We forecast 570,000 subscribers for Illico by 2022. About 22% of the population are French speaking. • Quebec-based Videotron had 1.69 million cable TV subscribers by end-2016; down by 171,000 subs since 2011. 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 shomi 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. Shaw and Rogers provided shomi for free within some of its more expensive bundles. 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. Sportsnet Now provides online access to the premium channel. • Operating mainly in the East, Rogers had 1.77 million basic TV subscribers by mid-2017; down by nearly half a million subs since 2010. With 2.19 million internet subs, its broadband service offers speeds up to 1Gbps. Rogers will launch a network based on Comcast’s X1 technology in early 2018. Rogers also had 10.40 million wireless subscribers by June 2017. • Mainly serving the Western provinces, Shaw had 1.66 million basic residential cable TV subscribers by November 2016. Shaw Direct had 775,000 satellite TV subscribers by November 2016 – also falling. Similar to Rogers, overall cable TV subs numbers are falling. • Shaw carries CraveTV, which is provided free to top paying BlueSky TV subs. Shaw is rolling out its BlueSky TV network based on Comcast’s X1 technology. Shaw also runs 19 pay TV channels. Corus Entertainment acquired Shaw Media for $2.65 billion. • Ontario and Quebec-based Cogeco Connexion had 741,000 TV subscribers at November 2016, although 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. However, Cogeco stopped marketing its experimental IPTV network in mid- 2014. Cogeco is the only large cable operator not to offer mobile. • Canada had 2.71 million paying IPTV subs at end-2016. IPTV is shaking up the pay TV sector, with four main operators (Manitoba Telecom Services (Acquired by Bell in early 2017.