The video streaming industry is experiencing rapid growth and intensifying competition.
Established media companies, technology giants, and content creators are investing in streaming platforms to capitalize on the growing market. Companies are vying for market share by offering compelling content libraries, unique features, and competitive pricing.
In 2022, global SVoD subscribers outpaced pay TV subscribers for the first time
Subscription video-on-demand (SVoD) platforms commanded about 1.5 billion subscribers globally in 2022, while global pay TV subscribers stood at 1.4 billion, according to GlobalData forecasts.
Between 2018 and 2022, global SVoD subscriber volume expanded at a compound annual growth rate (CAGR) of 30%, compared to 4% for pay TV subscriptions. This is primarily attributable to the trend of ‘cord-cutting’, where consumers transition from traditional cable, satellite, and terrestrial TV to SVoD platforms. The Covid-19 pandemic also acted as a catalyst for SVoD adoption as stay-at-home measures increased household demand for digital entertainment solutions worldwide.
The global SVoD subscriber volume will surpass the two billion mark by 2027. In contrast, the global pay TV subscriber base will stall at 1.5 billion in 2027.
Intense rivalry is leading to the launch of ad-based offerings
The consumer shift away from traditional TV has had a damaging impact on TV studios and broadcasters, who rely on advertising for revenues. However, traditional TV continues to attract a significant share of advertising spending despite the popularity of video streaming services. This is because most video streaming services are available via ad-free subscriptions, especially those offering premium content.
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Thus, advertisers and brands divide their ad budgets between traditional TV and video streaming services such as advertising-based video on demand (AVoD) and free ad-supported streaming TV (FAST) to ensure maximum reach. According to the 2023 Nielsen Annual Marketing Report, 84% of global marketers include streaming in their media plans, and on average, they allocate 45% of their ad budgets to video streaming channels.
Several SVoD providers, including Disney and Netflix, have introduced ad-supported plans at discounted prices to secure additional advertising revenue and fund content production. As video streaming cuts into traditional TV’s ad revenues, concerns for accurate audience measurement are also on the rise.
Audience measurement in video streaming is complex
This is due to factors like cross-device data fragmentation, the user landscape, and technological and privacy limitations. Video streaming services operate on multiple devices, making it difficult to track viewership consistently. Moreover, users have individual viewing patterns and preferences and consume content at different times in non-linear ways, leading to a more fragmented and complex audience landscape.
Furthermore, video streaming services offer personalized and on-demand content that poses challenges for traditional measurement techniques originally designed for linear TV. For example, streaming services use encryption for content delivery, limiting the visibility of user behaviour to external measurement tools. As a result, traditional TV’s standardized measurement systems do not apply to video streaming services. In addition, privacy regulations limit the collection and use of consumer data, restricting the granularity and depth of audience measurement.
Audience measurement solutions must become more sophisticated to address these challenges. Cross-platform measurement solutions are essential to accurately track audiences for streaming services. However, different measurement firms (e.g., Nielsen, ADOBE, comScore) use different measurement metrics.
Incumbent audience measurement firms are under threat
In January 2023, Comcast, Paramount Global, Fox Corp., Warner Bros., Discovery, and Televisa created the Joint Industry Committee (JIC) to vet and certify how TV audiences are measured. Ad agencies like the Video Advertising Bureau have also joined, and the JIC aims to develop unified audience measurement solutions by the end of 2023. Nielsen’s long-time leadership in TV measurement is under threat.