On Monday 8th July, the topic of our latest forum was the evolution of the subscription OTT market.
OFCOM’s research last year year showed that the UK now has more SVOD than Pay TV subscribers; and with the likes of BritBox, Disney+, WarnerMedia and NBC Universal set to join the market, it’s clear that further change is ahead of us. So we gathered an impressive panel of five experts to discuss their views on the current state of play in the SVOD market, as well as their market predictions for the 2020s:
Mike Darcey – Senior Strategy Advisor, MTM
Susie Buckridge – CEO, YouView
Bal Samra – Group Commercial Director, BBC
Jessica d’Ardenne – Director of Product, Web, Acquisition & Retention, DAZN
Andy Thoms – Head of Partnerships, Google EMEA
We’ve outlined some of the key take-outs from the forum, covering the market as it stands, how it could look in the coming years, and some of the challenges that services could face along the way.
Where is the subscription OTT market now?
After deliberating whether the SVOD OTT market was still experiencing its nascent stage or was more mature, panellists agreed that it’s only just reached ‘the end of the beginning’. Together, they explained how the market still presents an array of opportunities for new entrants seeking to break through, as well as ongoing promise for the market leaders.
“From the consumer’s perspective, everything looks great. We see unprecedented levels of investment in quality content, greater convenience than ever in modes of consumption, and more flexibility with smaller bundles at lower prices.”
Considering what can be learnt from the market so far, panellists agreed that it’s difficult to glean significant learnings from the rise of the dominant players (Netflix, Amazon and Now TV) in terms of business models, as each is so unique (with some supplementing other arms of its brand, or relying on existing content partnerships).
However, there was no doubt that new entrants can (and must) learn from the high standards that the leaders have set. Panellists noted that Now TV, Amazon Prime, and particularly Netflix, have set the bar for UK consumers’ expectations in terms of the user experience, content, and ease of access (like Netflix buttons on remotes). This puts considerable pressure on new entrants to reach new heights in all aspects of the OTT market:
“Anyone who now enters the market has to, at a minimum, meet that high bar, and then exceed it.”
What does the future of the subscription OTT market look like and what are the challenges it faces in the 2020s?
Our panellists agreed that future services will be looking to niche content in the coming years to grow the market, since Netflix, in particular, is now seen as delivering everything to everyone. Pressure is growing for new entrants to differentiate their offer, and some may look to do so by targeting niche but captive audiences (e.g. fans of particular sports) or by bringing a more immersive, experiential element to consumers. What is critical though, is that they must take viewers’ needs into account to be successful:
“If we’re solving a user problem, then we’re doing the right thing by launching a service”
Looking forward to the 2020s, the challenges differ greatly between the major players and the new market entrants. For the former, the primary challenge will be maintaining their level of growth by entering new markets, with total subscription revenue growth predicted to be modest in the 2020s. For new entrants, price point presents a challenge as much as an opportunity. With more consumers moving into stacking multiple subscriptions, we could see incumbents implementing pricing strategies designed to tighten consumers’ purse strings for new services.
With some hotly-anticipated subscription OTT services on the horizon, it’s an exciting, if hard-to-predict, time for the market. At this early stage (without solid consumer marketing), there was a consensus that Disney+ has most potential to make an immediate impact on the market. In addition, the wealth of much-loved content that BritBox will bring, courtesy of BBC and ITV, is sure to attract some fans, as it has already proven since its launch in North America.
However, what the industry is continuing to explore is how consumers will react to the proliferation of services available, and how TV platforms will adapt to ensure viewers continue to have easy journeys to content from lots of services. The questions on everyone’s lips are what’s the limit for SVOD stacking, potential for churn and cannibalisation of existing services?
It’s a fascinating time for the TV market, so please do get in touch if you’d like to discuss our forum, or anything else about the SVOD world – we’d be happy to help!