Trends in the EU SVOD market November 2017 Christian Grece Trends in the SVOD market European Audiovisual Observatory (Council of Europe), Strasbourg, 2017 Director of publication – Susanne Nikoltchev, Executive Director European Audiovisual Observatory Editorial supervision – Gilles Fontaine, Head of Department for Market Information European Audiovisual Observatory Author – Christian Grece, Analyst, [email protected] European Audiovisual Observatory Press and public relations – Alison Hindhaugh, Press officer, [email protected] European Audiovisual Observatory Publisher European Audiovisual Observatory 76 Allée de la Robertsau, 67000 Strasbourg, France Tel.: +33 (0)3 90 21 60 00 Fax: +33 (0)3 90 21 60 19 [email protected] http://www.obs.coe.int Cover layout – ALTRAN, Neuilly-sur-Seine, France Please quote this publication as Trends in the EU SVOD market, European Audiovisual Observatory, Strasbourg, 2017 © European Audiovisual Observatory (Council of Europe), Strasbourg, November 2017 If you wish to reproduce tables or graphs, please contact the European Audiovisual Observatory for prior approval. Opinions expressed in this publication are personal and do not necessarily represent the view of the European Audiovisual Observatory, its members or the Council of Europe. Trends in the EU SVOD market Christian GRECE Gilles FONTAINE Table of contents Key findings ............................................................................................................................ 1 1. SVOD in context ................................................................................................................ 3 1.1. Segmentation of the pay on-demand market ..................................................................................................................................... 3 1.2. SVOD in perspective, with TVOD ............................................................................................................................................................. 3 1.3. SVOD in perspective, with Pay-TV ........................................................................................................................................................... 5 2. SVOD in numbers ............................................................................................................. 11 2.1. Subscribers and penetration ................................................................................................................................................................... 11 2.2. Revenues ........................................................................................................................................................................................................ 14 3. The SVOD players ............................................................................................................ 19 3.1. The supply of SVOD services .................................................................................................................................................................. 19 3.2. Pan-European, regional and national players .................................................................................................................................. 21 3.3. The leading players ................................................................................................................................................................................... 22 Figures Figure 1: Compared annual growth rates of TVOD and SVOD in Europe .......................................................................................................... 4 Figure 2: Breakdown of pay on-demand services revenues in Europe (mEUR) ............................................................................................... 4 Figure 3: Breakdown of pay-services subscription (m).............................................................................................................................................. 5 Figure 4: Breakdown of the pay-services revenue (mEUR) ...................................................................................................................................... 6 Figure 5: Average revenue per subcriber for Pay-TV and SVOD (EUR) ............................................................................................................... 6 Figure 6: Growth rate of Pay-TVrevenue (%) ................................................................................................................................................................. 7 Figure 7: Pay-TV and SVOD combinations in the US ................................................................................................................................................. 8 Figure 8: Pay-TV and SVOD combinations in the United Kingdom ...................................................................................................................... 8 Figure 9: Pay-TV and SVOD combinations in Germany ............................................................................................................................................. 9 Figure 7: Number of subscribers to SVOD in Europe (m) ....................................................................................................................................... 11 Figure 8: 2015-2016 growth rates of SVOD subscribers (%) ................................................................................................................................ 14 Figure 9: SVOD revenue in Europe (m EUR) ................................................................................................................................................................ 15 Figure 10: Breakdown of the increase of SVOD revenue (m EUR) ...................................................................................................................... 16 Figure 11: Monthly ARPU of SVOD services by country (EUR) ............................................................................................................................. 17 Figure 12: Breakdown of SVOD services by genre (%) ............................................................................................................................................ 19 Figure 13: Breakdown of SVOD services by distribution network (%) .............................................................................................................. 20 Figure 13: Breakdown of SVOD services by country of establishment (%) ..................................................................................................... 21 Tables Table 1. Number of subscribers to VOD by country in 2016 (m) ..................................................................................................................... 12 Table 2. Penetration of SVOD services by country in 2016 (%) ....................................................................................................................... 13 Table 3. SVOD revenue in Europe by country ......................................................................................................................................................... 15 Table 4. Examples of pan-European and regional SVOD services .................................................................................................................. 22 Table 5. Main SVOD services active in EU 27 by number of subscribers (thousand) .............................................................................. 23 Table 6. Netflix market share estimates by country, only OTT SVOD services (%) .................................................................................. 24 Trends in the EU SVOD market Key findings Subscription video-on-demand (SVOD) is the driving force behind the growth of the pay on-demand market, with 66% of total 2016 pay on-demand service revenue, vs. only 11% in 2011. SVOD remains a comparatively small market compared to pay-TV. It accounted in 2016 for 18% of all subscriptions to pay-services (linear Pay-TV+ SVOD) vs. only 1% in 2011, and for 6.8% of total revenue vs. 0.2% in 2011. However, SVOD is growing fast. By the end of 2016, there were an estimated 38.7 million subscribers to SVOD in EU 27 and 43.5 million in Europe. The average annual growth rate of the number of subscribers between 2011 and 2016 was 55.5% for EU 27 and 54.2% for Europe. The average penetration of SVOD among TV households was 17% for EU 27, and 14% for Europe. Four out of the top five countries in terms of penetration of SVOD were Scandinavian countries. Revenues are also increasing sharply: In 2016, total revenue for SVOD services was estimated at 2.5 bn EUR in EU 27 and 2.8 bn EUR in Europe. The average annual growth rate of revenue between 2011 and 2016 was 128% for EU 27 and 106% for Europe. The top five countries by SVOD revenue were the United Kingdom, Germany, Sweden, Denmark and Norway; they accounted together for 69% of total SVOD revenue in Europe. A total of 197 SVOD services were active in Europe by the end of December 2016, and 330 if each linguistic version of the services is counted separately. The majority of services are dedicated to film and TV diction, and the vast majority of the services are distributed over the Internet. Netflix holds an approximate 47% of the total number of over-the-top (OTT) SVOD subscribers in the EU, and Amazon about 20%. In certain national markets, Netflix faces strong competition from national players