SVOD: More Subscriptions = More Consumption?

SVOD: More Subscriptions = More Consumption?

what is the difference between vod and svod

Introduction

Subscription video on demand, or SVOD, typically refers to platforms and services that require a user to subscribe to view its content. Some of the most popular examples of SVOD include Netflix, Disney+, Amazon Prime Video, DAZN and Hulu.

Nowadays, SVOD platforms exist for every type of content and genre. There are mainstream options – like Netflix and Disney+ – that are perfect for family media consumption. For a mixture of live and on-demand sports coverage, platforms like DAZN are leading the way. And there are even niche platforms – like Crunchyroll for anime – that are doubling their subscriber numbers at an incredible pace.

The philosophy behind SVOD remains the same – delivering content to consumers in exchange for a recurring monthly or annual sum. But the goalposts are always moving – with plenty of new entrants in the market and evolving distribution relationships between platforms and movie studios making things slightly more complicated in the grand scheme of things.

In this week’s blog, the team at PlayBox Technology are covering the latest SVOD news and figures, and what this means for broadcasters and consumer audiences alike.

SVOD Booms

A recent report from the folks at Digital TV Research suggests that worldwide SVOD subscriptions will increase by 65% to 1.5 billion by 2026. Over 201 million subscriptions were added in 2020 alone; likely as a result of stay-at-home orders and lockdowns across the world. Almost all recent research in the field suggests that SVOD shows no signs of slowing down in the majority of markets.

What is even more interesting is the average number of subscriptions that one household ‘stacks’ at one time. Believe it or not, some time ago, all an average household required was one Netflix subscription to fulfil their entertainment needs. Granted, SVOD was still a relatively fresh concept for the mainstream back then, and the competitive landscape had a small number of players. However, nowadays, it’s not at all uncommon for the average family to subscribe to three or four different SVOD services. A 2021 report by Ampere Analysis states that the average US streaming household stacks four different SVOD services. This, and a number of other streaming reports, put forward some strong evidence of increased audience consumption in the streaming world.

More subscriptions = increased consumption?

But are audiences actually consuming more streaming content? Or are they diversifying their SVOD portfolios in the ongoing search for better, more high-quality content? 

It’s not unheard of for some viewers to maintain one of their SVOD subscriptions for the sole purpose of watching a single recurring series or TV show that isn’t available anywhere else. I’m somewhat guilty of this myself; no longer is it the case that a single SVOD platform could provide the wide variety of content I wish to consume. 

The dilution of content across multiple SVOD platforms means more choice, yes, but it’s ultimately not as cost-effective for customers as it once was. As players like Disney and Discovery entered the market, tricky licensing deals and direct-to-consumer strategies saw a multitude of media companies bringing their content back in-house (as opposed to third-party licensing deals with the likes of Netflix and Amazon Prime Video). 

Whilst this is good news for media companies who now have more control over the distribution of their own content, are customers losing out? It remains to be seen whether the average household will continue to add further subscriptions to their portfolio of platforms in 2021 – or whether platform purging will take place with increasing subscription costs in mind.

External factors

As we saw in 2020 with COVID-19, external factors can have a huge influence on the way that households interact with SVOD services. Lockdowns meant that audiences were more likely to ‘bunker down’ with their favourite SVOD platforms and consume more content than ever before. As a result, 2020 was a huge year for streaming, and we’re still experiencing those after-effects today.

More recently, fresh entertainment and television regulations in China mean that certain reality TV and talent shows are to be removed from SVOD platforms and live broadcasts. This could have a profound effect on subscription numbers there with less popular programming on offer. China currently holds the majority of SVOD subscriptions in the Asia-Pacific region and is forecasted to account for 354 million subscriptions by 2026. Once regulations are in place, we could see this number plateau. 

As competition heats up between a flurry of SVOD platforms, the fight for new subscribers becomes an increasingly difficult endeavour. But what can be even more difficult for platforms is keeping those subscribers for the long term. Minimising subscriber churn is a much-discussed issue and an ongoing struggle for SVOD services. Again, the likelihood of a subscriber churning can be dependant on external factors – economic downturn being one such factor. With less money in your average subscriber’s pocket, so increases the chance of them cutting back on SVOD luxuries until fiscal situations improve.

Final thoughts

There is no denying that 2020 had a huge impact on the way that audiences interact with subscription video-on-demand platforms. The introduction of new platforms and increasing at-home video consumption created what some may call a ‘perfect storm’ for the SVOD landscape. But as the average number of subscriptions held by the average household increases, does it mean that audiences are actually consuming more content? Or is it the result of content dilution amongst platforms?

We believe it might be somewhere in the middle. It remains to be seen whether households will streamline their SVOD subscriptions as work and life slowly returns to normal – or whether they will continue to invest in streaming services in the search for more content. After all, content is still king.

At PlayBox Technology, we’re most well-known for enabling thousands of broadcasters across the world in getting their content from A to B (the audience) with our industry-leading playout software. You can now download free trials for our latest playout and streaming software: https://playboxtechnology.com/product-category/trials/