VIDEO ON DEMAND SERVICE MARKET ANALYSIS

Video On Demand Service Market Size and Trends

The Global Video on Demand Service Market is estimated to be valued at US$ 101.09 Bn in 2024 and is expected to reach US$ 198.71 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 10.1%. Increasing penetration of smart TVs and mobile devices are contributing significantly to the growth of this market.

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Market trends suggest that there is increasing demand for video streaming on multiple devices from users, driving OTT platforms to invest in expanding their content libraries as well as improving streaming quality. Rising subscription of broadband and 5G penetration will further propel this growth. Major players are also focusing on localized content and regional language interfaces to target new audience.

Expansion of broadband and mobile internet access

The global penetration of high-speed broadband and mobile internet access has been steadily growing over the past decade. According to recent reports, over half of the world's population now has an internet connection with speeds fast enough to support high-quality video streaming. This growth has been particularly strong in emerging economies which are increasingly adopting smartphones and building out their telecom infrastructure. As access expands to rural and remote areas worldwide, more consumers now have the ability to enjoy video content anytime, anywhere on their mobile devices. Streaming video requires much higher bandwidth compared to other online activities, so the rise of widespread high-speed internet access has eliminated a major barrier for the adoption of video on demand services. Leading streaming platforms are investing heavily in content localization and partnerships with mobile carriers to capitalize on these connectivity trends and reach new audiences outside of traditional markets. As long as worldwide broadband and 5G deployment continues its rapid trajectory, it will bring hundreds of millions of additional viewers within reach of online video services in the coming years.

Market Concentration and Competitive Landscape

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Changing viewing habits of younger generations

Another key driver has been the changing media consumption patterns of younger audiences who have grown up with the internet. Millennials and generation Z are highly connected digitally and have much lower rates of traditional pay TV subscriptions compared to older consumers. They are comfortable navigating the online world and expect to be able to access all types of media on demand whenever and wherever they want. Streaming services provide this level of flexibility and ability to watch only the specific shows and movies that interest them the most. In particular, binge watching full seasons of a series has become a very popular pastime for younger viewers. As these digital natives enter their prime spending years, their viewing habits will have an outsized impact on the future of the entertainment industry. Media companies have taken note and are aggressively adapting their business models, launching new video streaming platforms with features that cater perfectly to these audiences who will drive future growth in the Video on Demand Service market.

Key Takeaways from Analyst:

Consumers are demanding anytime, anywhere access to a wide range of movies and TV shows of their choice fuelling the adoption of video streaming services. This change in audience viewing behavior has prompted media companies to offer VOD platforms and invest heavily in developing exclusive original content. Additionally, improving internet infrastructure in developing countries is expanding the market reach of major players.

However, capital intensive investments in content creation and frequent change in consumer preferences pose challenges. Moreover, technical issues related to connectivity and device compatibility restrict the growth potential to some extent. Pricing wars between providers is also intensifying competition.

North America currently dominates the market due to high-speed internet connectivity and widespread popularity of digital streaming. However, the Asia Pacific region is expected to rise as the fastest growing regional market with increasing disposable incomes and smart device adoption in large countries like China and India. Overall, the video on demand service market is presumed to flourish over the coming years as media companies resolve operational challenges and target newer demographics.

Market Challenges: Lack of proper Internet connectivity infrastructure in some regions

Lack of proper internet connectivity infrastructure in some regions is significantly restraining the growth of the global video on demand service market. The video streaming industry requires high-speed internet access to deliver high-definition multimedia content to users efficiently. However, in many developing and underdeveloped parts of the world, the necessary broadband infrastructure is still lacking.

The lack of robust connectivity infrastructure also prevents service providers from upgrading their offerings. They are unable to roll out new features like 4K/HDR streaming, multiple concurrent device access, downloads for offline viewing etc. that have become standard in developed markets. This affects the competitiveness of their services in comparison to global leaders. The slow growth in regions with limited connectivity in turn slows down the overall expansion of the worldwide video on demand industry.

Market Opportunities: Technological advancements in streaming services

Technological advancements in streaming services have opened up huge opportunities in the global video on demand service market. With improving internet connectivity and widespread use of smartphones, streaming services are able to deliver high quality video content to customers anywhere, anytime on their preferred devices. This shift from traditional linear TV viewing to on-demand streaming is revolutionizing the entertainment experience of audiences globally.

Platforms like Netflix, Amazon Prime Video, Disney+, Hulu, etc. have vastly expanded their original content libraries and invested heavily in producing localized regional language content. This has not only helped them gain new subscribers internationally but also engaged existing customers by catering to their language preferences.

The widespread deployment of 5G technology and investments by governments as well as private players to expand broadband connectivity will further push this on-demand video streaming revolution in the coming years. Higher internet speeds with low latency will allow platforms to deliver an even smoother streaming experience in enhanced formats like 4k or more. Live sports streaming, interactive gaming sessions, immersive virtual/augmented reality experiences etc. will become mainstream use cases driving more customers to embrace digital movie and TV subscriptions.

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Insights By Offering - Growing demand for personalized and on-demand content drives the Solutions segment growth

In terms of offering, solutions segment is expected to contribute 62.1% share of the market in 2024 owing to the growing demand for personalized and on-demand content amongst consumers. As viewers seek more control over what they want to watch and when, the ability of solutions to deliver tailored content directly to users has accelerated their adoption. Solutions allow media companies and service providers to analyze viewer preferences and recommend customized playlists, movies, shows based on past viewing behavior and interests. This degree of personalized experience enhances viewer satisfaction and engagement. Further, solutions assist platforms in expanding their content libraries and monetizing older or long-tail content through recommenders. The flexibility of solutions also helps platforms experimental with various pricing and bundling strategies to attract different subscriber segments. These advantages have made solutions increasingly vital for companies seeking to optimize and scale their digital reach.

Insights By Content Type- Expanding access to diverse streaming content fuels the Movies segment growth

In terms of content type, movies segment is expected to contribute 39.7% share in 2024 owing to the expanding access of diverse streaming movie content. Movie buffs now have access to an immense catalog of films spanning various genres, eras and regions on video streaming platforms. Services are investing heavily in procuring exclusive rights to both contemporary blockbusters as well as back catalogs of major studios and indie films. This allows users to easily find rare, obscure and niche movies increasing their choices multifold compared to traditional distribution avenues. Moreover, platforms regularly curate movie collections and playlists catering to specific moods, themes, directors etc. enriched discovery experience. The availability of movies in multiple languages with subtitles has also expanded the potential audience base. Driven by these advantages, movies continue gaining traction particularly amongst streaming-first younger demographic covetous of on-demand viewing flexibility.

Insights By Vertical - Growing popularity of use cases drive the educational/fitness programs segment growth

In terms of vertical, educational/fitness programs segment is expected to contribute 47.2% share in 2024 driven by the growing popularity of various use cases for online learning and wellness. Integrating short video and audio formats, educational and training platforms are effectively delivering bite-sized lessons and how-tos on diverse topics for individualized and self-paced learning. Meanwhile, fitness applications and workout videos are helping people practice yoga, dance, exercises routines from the comfort of their homes. The pandemic has further accelerated this shift as educators and trainers utilize digital tools for remote learning and development. Video also enhances understanding through visual demonstrations compared to text-based methods. It allows reaching disadvantaged populations with internet access only. The flexible consumption of VOD education and wellness programs suit busy modern lifestyles and population. This is contributing to higher adoption of such programs across verticals.

Regional Insights

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North America has established itself as the dominant region in the global video on demand service market. The region is expected to account for 35.9% of the market share in 2024. With significant industry presence of leading OTT players like Netflix, Hulu, and Amazon Prime Video, the U.S. and Canada account for the largest share of subscriptions. Ease of access combined with affordable pricing has made video streaming services enormously popular in the region. The presence of Hollywood and availability of English content catering to local tastes has helped drive high adoption rates over the last decade. An excellent connectivity infrastructure with widespread availability of broadband also provides consumers with a seamless viewing experience regardless of location.

Apart from domestic demand, exports of American media content have additionally boosted revenues for North American VOD platforms. Major studios like Disney and Warner Bros have increasingly leveraged digital platforms for international distribution of films and shows, finding a large untapped market abroad. The region thus continues to be a critical production and export hub, enjoying global influence in the online entertainment space.

The Asia Pacific region has emerged as the fastest growing market, led by countries like India and China. With over 60% of the world's population and massive untapped potential, digital platforms are aggressively focused on expanding their footprint. While pricing in the price-sensitive markets is lower as compared to North America and Europe, userbase growth is exponentially high. Localized content and payment options have accelerated signups across various Asian nations.

Countries like India have witnessed a massive surge in the consumption of online video content on the back of cheaper data plans. Local players such as Hotstar have amassed huge subscriber numbers by offering large Bollywood and regional movie libraries alongside live sports. The young demographic, rising incomes, and proliferation of smartphones is likely to ensure the APAC region outpaces others in terms of new subscriber additions going forward. With growing export focus of Asian production houses, VOD platforms are also expected to expand their libraries of local content programming internationally.

Market Report Scope

Video On Demand Service Industry News

• In July 2022, Netflix Inc., a leading streaming service provider, announced a partnership with Microsoft Corporation, a global technology company, to develop advertising tools and sales strategies for its new ad-supported subscription plan. This initiative aims to attract new subscribers from various regions where consumers often opt for premium subscriptions, enhancing Netflix's offerings with a tier titled "Basic with Ads."
• In May 2022, Amazon Prime Video, a leading streaming service, announced a multi-film licensing agreement with Sajid Nadiadwala's Nadiadwala Grandson Entertainment (NGE). Under this deal, the platform will host NGE's upcoming films shortly after their theatrical release, making them available to all Prime members. Additionally, these films can be rented by all Amazon customers, regardless of Prime membership, during the 'Early Access Rental' window.
• In January 2023, FOX Entertainment, a prominent television network, and Hulu, a leading streaming service owned by Disney, announced a multi-year content partnership that includes in-season streaming rights for FOX's extensive programming lineup. Under the terms of the agreement, all FOX primetime entertainment shows, such as Family Guy, The Cleaning Lady, The Masked Singer, and Next Level Chef, will continue to stream on Hulu the day after their linear broadcast. Additionally, the partnership establishes a strategic marketing alliance, with FOX and Hulu branding coexisting across all marketing channels to align messaging for live and on-demand viewing of FOX content.
• In June 2022, Amazon Prime Video, an over-the-top (OTT) streaming platform, partnered with AMC Networks, a U.S.-based entertainment company, to offer its content through Prime Video Channels in India. As part of this collaboration, Prime Video Channels will feature the ad-free subscription service AMC+ and AMC's streaming service Acorn TV on a subscription basis.

*Definition: The Global Video on Demand Service Market provides video streaming services to consumers worldwide, allowing them on-demand access to TV shows, movies, and other video content from any internet-connected device. Major players in this market operate streaming platforms and content libraries that users can access for a monthly subscription fee or pay-per-view rental charges. The market has seen tremendous growth with increased availability of high-speed internet and continues expanding as more premium content becomes available instantly to stream globally.

Market Segmentation

•  Offering Insights (Revenue, US$ Bn, 2019 - 2031)
  • Solutions
  • Services
•  Content Type Insights (Revenue, US$ Bn, 2019 - 2031)
  • Movies
  • Music
  • TV Shows/Web Series
  • Educational/Fitness Programs
  • Others
•  Vertical Insights (Revenue, US$ Bn, 2019 - 2031)
  • BFSI
  • Education
  • Government & Public Sector
  • Healthcare & Life Sciences
  • Media & Entertainment
  • Others
• Regional Insights (Revenue, US$ Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • Amazon.com, Inc. (Amazon Prime Video)
  • Apple Inc. (Apple TV+)
  • AT&T Inc. (HBO Max)
  • Cisco Systems, Inc.
  • Comcast Corporation (Xfinity)
  • Disney+ (The Walt Disney Company)
  • Fujitsu Limited
  • Google LLC (YouTube TV)
  • Hulu LLC (The Walt Disney Company)
  • Microsoft Corporation
  • Netflix, Inc.
  • Peacock (NBCUniversal)
  • Sling TV (DISH Network)
  • Tencent Holdings Ltd. (WeTV)
  • Verizon Communications Inc.