Worldwide, Viewers Prefer Pay TV Services to SVOD, Says Informitv

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Contrary to the perception that consumers are switching in volume to SVOD (subscription video-on-demand) services like Netflix, it is evident that more and more people worldwide are prepared to pay for programming.

That's the summation of the first Multiscreen Index published by Informitv which charts digital subscriber numbers of 100 leading pay television services worldwide including Comcast, AT&T U-verse, Korea's KT Olleh, and India's Dish TV.

“There may be some resentment about price in certain markets, but there is very little evidence of cord-cutting en masse,” says William Cooper, founder and chief executive of informitv. “Despite media reports that tend to focus on cable losses, everything points to a long term trend to pay TV worldwide. It is the clear direction of travel, whether we like it or not.”

Consumers are prepared to pay for choice, convenience, and control, and increasingly their expectations are for content to come on any device or display, explains Cooper.

“We are seeing a response by existing pay TV operators and opportunities being grasped by new entrants like telcos to meet the consumer appetite for a managed service rather than having to assemble their own programming from OTT alternatives," Cooper says. "OTT alternatives don't yet provide the complete service that people expect from pay TV operators while pay TV operators are becoming full service communications providers by offering a more comprehensive suite of services to address the threat from OTT.”

The picture differs by market, but the overall trend is the same by region or mode of delivery. In mature markets like the U.S. where 85 percent of the market is already pay TV, there is less room for growth, but nonetheless the report points to a modest 1 percent rise in 2013.

There is significant growth in Latin America and Eastern Europe, where Russia's Rostelecom gained 70,000 subscribers in the last quarter to 5.3 million. The Asia Pacific region shows the greatest growth, up 1.63 million subscribers in the last quarter, without counting major operators in China and India that do not disclose subscriber numbers (India's Dish TV amassed 200,000 subscribers in last quarter, rising to 11.2 million).

BSkyB is the dominant pay TV player in the U.K., having reached its target of 10 million subscribers in 2010. Its TV customer base is now 10.5 million but growth has plateaued.

“Sky's strategy is among the most advanced of all operators in terms of dealing with the threat of OTT,” says Cooper. “It's been streaming media for a long time, beginning its online services in 2006. It's shrewd in its strategy and constantly innovating to come up with fresh models to provide a challenge to newcomers.”

There is a long-term move to supplement free TV with premium services, and also to supplement free with lower-cost VOD options, Cooper says. The challenge for pay TV is to respond to that and provide fuller service by offering some of the low hanging fruit of back-catalogue material.

Sixty percent of pay TV services in the Index now deliver to multiple screens other than a traditional television, including smartphones, tablets and other network-connected devices.

“IPTV subscriptions have topped 100 million worldwide and there is certainly evidence that these are starting to take some market share in some cases from existing incumbents and forging new markets for pay TV,” says Cooper. “I do think that operators are having to work much harder now.”

The 100 multichannel pay TV services in the report cover over 30 countries and generally each has more than a million digital television subscribers. They collectively represent around 320 million subscribing homes worldwide. In 2013, the Multiscreen Index saw a net gain of 18.98 million subscribers, an increase of 6.3 percent. In the last quarter, the ten services in the Index reporting the largest subscriber gains added 2.97 million video customers or 5.6 percent. The ten reporting the largest losses collectively lost 0.48 million video customers in three months, a combined loss of 1.7 percent.

This first report has garnered significant interest, Cooper says, and he plans to produce quarterly updates going forward.

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