Subscription Video on Demand is Showing Huge Potential for Profit

29 Jun 2015

There are many opportunities for subscription video-on-demand services (SVoD) in emerging markets (Africa and the Middle East, Asia Pacific, Central, and Eastern Europe, and Latin America), according to the research report by Pyramid Research, ‘OTT Video in Emerging Markets: Monetization Strategies and 5-year Revenue Opportunity.’

The research forecasts that the user base for subscription video-on-demand services (SVoD) will grow from 19.4 million subscriptions in 2014 to 102.7 million by the end of 2019, building into a five-fold increase in SVoD revenues. Paid OTT revenue in emerging markets, according to the Pyramid research, will expand from $1.9 billion in 2014 to $6.0 billion in 2019.

Africa and the Middle East

In Africa and the Middle East, according to the new research, the SVoD and TVoD revenues will increase over the next five years to represent 7% of the regional pay-TV revenue.

Senior analyst at Pyramid Research, Daniele Tricarico, confirmed that: “In China, the proliferation of hybrid models combining advertising-funded video on demand (AVoD) and SVoD will be a major driver for growth,” but that “content regulation may hamper evolution in the near term.” “As the paid OTT opportunity strengthens in China, the regional Asia Pacific market will pick up from 2015–2016 onward,” says Tricarico.

Central and Eastern Europe

Pyramid expects paid OTT revenue to grow to represent 5% of pay-TV in Central and Eastern Europe. According to Tricarico, “SVoD adoption will pick up in the forecast period as the leading providers seek to monetize from the pervasiveness of online video through both TVoD and SVoD.”

In 2014, Latin America was the only emerging market where Netflix services were available. Together with Asia Pacific, the two regions accounted for 90% of paid OTT revenue in all emerging markets. Latin America and Asia Pacific will still make up 86% of the total paid OTT revenue in 2019. Various factors will drive the growth in subscription-based video-on-demand content. On the one hand, the growing investment in broadband infrastructure will lead to its improvement, along with the improvement in network speed and performance. On the other hand, local companies have the greater advantage to position SVoD services forward, if they have the financial resources to invest in attractive content. Pyramid Research

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