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You still watch TV? Get video-on-demand

Dubai - Global spending on consumer video media services will total $314b in 2017

Pay TV in the UAE is a roaring success as the nation caters to over 200 nationalities and consumers, who prefer to watch their favourite programmes at their desired time on their preferred device.
So television watching is a thing of past as the latest research from Gartner predicts that global consumer spending on subscription-based video on demand (SVOD) services will total $18.7 billion in 2017, an increase of 28 per cent from 2016. The competition within pay TV is now between SVOD and transactional video on demand (TVOD).
 
TVOD offers consumers the ability to access a wide variety of content, from either managed pay TV providers or over-the-top (OTT) companies such as Amazon, Google or Apple. "OTT-VOD sources are changing the landscape," said Derek O'Donnell, senior research analyst at Gartner. "OTT-VOD services are the fastest-growing segment in the VOD landscape and eroding pay-TV providers' share of revenue. OTT-VOD sources began outperforming traditional pay-TV sources in 2016."
O'Donnell added that the availability of premium-priced 4K content will increase end-user spending on TVOD content in mature regions, from $160 million in 2017 to $400 million by 2020. In emerging regions, increased competition in the TVOD marketplace from unmanaged providers and increased threats of piracy will put negative pressure on TVOD prices. End-user spending on TVOD services in emerging markets will decrease gradually each year, starting in 2017, by about $60 million to almost $445 million by 2020.
The average consumer adoption of SVOD services is 10 per cent in 2017, with an average average revenue per user (ARPU) of $7.41. The highest ARPUs are in Japan ($12.10), the mature Asia-Pacific ($10.84) and North America ($9.60).
Maaz Sheikh, CEO at Starz Play, said SVOD services are already set to show double-digit increases over the next four years.
"We see a huge hunger for content... and as we continue to add both English and Arabic worldwide exclusives, we will continue to drive forward the way the region looks at entertainment and TV. With the number of devices capable of supporting digital media only set to increase, greater options to access media content anytime and anywhere, and both fixed and mobile broadband continuing to grow, I see the strong upwards trend set to continue well into 2020, especially among the digital and youth Arab generation."
The report further states that global spending on consumer video media services will total $314 billion in 2017, a 4.2 per cent increase from 2016, according to Gartner. Pay TV services is the largest spending segment and is on pace to represent 90 per cent of the total market, totalling $282 million in 2017.
In 2017, emerging Asia-Pacific (20.8 per cent) and the Middle East and North Africa (17.4 per cent) are forecast to record the highest growth in end-user spending on consumer video media services.
Jonathan Haysom, vice-president, for home products at etisalat, said: "We see continued strong growth potential in pay TV. The primary driver for this is our customers appetites for live sport, our OnDemand catalogue and premium 'same-day-as-cinema' movie experiences. The simplicity of having a single entertainment provider for both broadband and media that delivers all the popular pay TV services into a single TV box also helps customers find, purchase and watch content."
Etisalat customers are watching more live sport and premium PayTV than ever before and as larger, higher-resolution TVs come out the potential to consume media also increases in unison.
"eLife TV customers are now able to watch much of this content 'on the go' across the UAE, as one of the highest mobile device penetrations in the world, our customers have more freedom than ever before in choosing what and where to watch their favorite shows," adds Haysom.
Earlier this year, China Mobile began offering its pay TV service free of charge to its premium subscribers for the first two years of a new contract. "This will lead to an influx of new subscribers in the pay TV marketplace. However, it will also bolster price competitiveness and put negative pressures on the ARPU of the overall pay-TV market," said Fernando Elizalde, principal research analyst at Gartner.
Moreover, Internet-delivered linear TV services have already launched in India and the Middle East, and Gartner expects these services will commence across all emerging regions by 2018. "We estimate that, incentivised by lower prices, one million households in emerging regions will enter the pay-TV market through an Internet TV service by 2020," said Elizalde. "The dramatic difference in the price of these packages compared with traditional pay-TV packages will also put downward pressure on ARPUs overall."
Sherif Dahan, regional director for OTT in the MEA at Vuclip, said: "These are exciting times for SVOD in the region and UAE being the hub where multiple OTT services have launched in the past couple of years and where VIU has launched at the beginning of 2017. With the mobile internet, smartphone and home broadband penetration being among the highest in the region and the world, the UAE always stands out as one of the markets that has the highest traction for SVOD services. No doubt that this also makes it a very competitive market for SVOD service providers. Such competition gets to be beneficial for both the service providers and the subscribers; whereby the first try their best to avail the best content, packages and user experience and the latter has the luxury of choice."
VIU in the UAE has witnessed great traction on their service from Arabs, Indians, Filipino and Western expats. Customers demand premium lineup of movies, TV series, TV shows, documentaries and music videos, that they find highly relevant and entertaining.
"SVOD in the region is on the rise and will take its time to become mainstream. 2017 should be an exciting year where the whole ecosystem takes one more step in its growth, maturity and consumer offering. We are... confident that the Middle East will prove to be another solid step for VIU after its success in Hong Kong, Singapore, Malaysia, Indonesia and India," said Dahan.
Vidya S. Nath, director for digital media at Frost & Sullivan, opines that although high-speed broadband penetration is around 80 per cent of 9.6 million population, conversion of "registered" viewers to paid subscribers for video and paid transactions have been slow. OTT video providers are still experimenting with freemium services to garner higher patronage and coverage.
"In 2016, there were 0.4 million SVOD subscribers comprising only eight per cent of the total addressable market of the five million plus addressable market. This can potentially grow at an optimistic CAGR of 20 per cent until 2020 as the market increases in the number of service providers (local and international). We also anticipate that telcos who are aggressively pursuing the Pay TV services market will bundle more and more OTT along with their partners. The average price of a subscription package is $10 per month for basic packs; but as operators bundle services with telecom operators, it will become more economic and attractive for consumers to subscribe to these SVOD platforms."
- sandhya@khaleejtimes.com