Global Video on Demand Service Market to Witness Rapid Growth Due to Increasing Smartphone Penetration and Expanding Over-the-Top Media Services
The Global Video on Demand Service Market is estimated to be valued at US$ 101.09 Bn in 2024 and is expected to exhibit a CAGR of 10.1% over the forecast period 2024-2031. The increasing penetration of smart devices along with high-speed internet connectivity has prompted users to consume online video content at their convenience. Furthermore, the expanding over-the-top media services that provide customized entertainment options are helping to drive the adoption of video on demand platforms.
Market Dynamics:
The growth of the global video on demand service market is fueled primarily by increasing smartphone penetration and expanding over-the-top media services. Growing internet penetration across major regions has enabled high-speed connectivity on mobile devices. This has boosted the adoption of OTT media streaming applications and video on demand platforms. According to statistics, over half of the global population now uses smartphones. Increased availability of affordable smartphones coupled with low-cost data plans is supporting the consumption of online video content.
Additionally, the launch of innovative OTT offerings such as subscription video on demand and advertisement-based video on demand have enabled users to access a wide range of on-demand movies and TV shows on their smartphones and smart TVs. Leading media companies are leveraging advanced technologies such as artificial intelligence and virtual/augmented reality to provide enhanced video streaming
Increased Internet Penetration and higher Speeds Drive Demand for Video on Demand Services
One of the key drivers of the global video on demand service market is the increasing internet penetration across the world. As more and more people gain access to high-speed internet on their smartphones, laptops and smart TVs, their demand for streaming video content on demand is increasing significantly. Advanced technologies like 4G and 5G cellular networks as well as high-speed broadband connections have enabled viewers to stream high-quality videos without interruptions. This has boosted the viewership of video on demand platforms. According to statistics, global internet users increased from 3.9 billion in 2019 to 4.6 billion in 2021. Developing countries in Asia Pacific and Latin America are witnessing strong growth in internet users which is driving the demand for video on demand in these regions.
Growth of Over-the-Top Platforms Fuels Subscription to Video Streaming Services
Another major driver for the video on demand service market is the proliferation of over-the-top (OTT) streaming platforms across the world. Popular global platforms like Netflix, Amazon Prime Video, Disney+, Hulu etc as well as several regional players have launched their services in international markets over the past few years. This has given viewers an abundance of choice in terms of content libraries as well as price points for subscriptions. Platforms compete with each other on the basis of exclusive and original content to attract new subscribers. The availability of low-cost mobile and broadband data plans has also encouraged the growth of OTT usage on smartphones. As more players enter the market with innovative business models, competition and choice will drive further subscription growth for video on demand.
Declining Live TV Viewership Acts as a Restraint
One challenge faced by the video on demand service market is the declining viewership of linear/live TV, especially among younger demographics. Traders have started moving to on-demand platforms for the flexibility they offer in terms of content selection and viewing experience. This is negatively impacting advertising revenues and subscription fees of traditional pay TV operators. As their user base shrinks due to cord-cutting and cord-shaving, investments in new content are getting restricted. This acts as a restraint for licensing newer and exclusive titles for video on demand platforms. Traditional pay TV and cable operators are gradually losing their stronghold on content distribution.
Piracy Issues Hamper Revenue Growth
Rampant piracy through illegal streaming sites and download portals is a major restraint for realizing the true revenue potential of the global video on demand service market. While legal streaming options have made great strides in terms of licensing content and offering value to users, pirates continue offering media files without restrictions. This discourages paying subscriptions and discourages investments in premium content creation. Although anti-piracy laws have been strengthened, deep-discount policies of illegal portals will continue denting subscription revenue to some extent. Content owners and OTT platforms need innovative strategies and collaborations to further curb privacy issues boosting their revenue streams.
Diversification into Adjacent Markets Offers New Opportunities
One key opportunity for players in the video on demand service market is diversifying into related or adjacent markets to strengthen their business propositions. For example, many streaming platforms are now venturing into gaming and e-commerce segments by offering in-game inventory, peripherals and merchandise through their platforms. This enhanced engagement and stickiness of users on their ecosystem. Similarly, platforms can venture into developing original films, shows and events to control intellectual property rights as well as deepen content moats. Regional expansion into new international territories also provides a major growth opportunity. Partnerships with telecom operators, ISPs and hardware manufacturers can help drive bundling opportunities and additional subscriptions. With constant innovation, the video on demand service market is poised for strong growth even amid competition and challenges.
Emergence of New Technologies Enable New Business Models
Emerging technologies like 5G, artificial intelligence, augmented reality, blockchain etc are bringing new opportunities for disruptive business models in the video on demand sector. For example, 5G can enable ultra-immersive viewing experiences through VR and AR content. AI and machine learning can help platforms better understand user preferences to offer hyper-personalized entertainment. Blockchain based decentralized platforms may allow users to own, distribute and monetize media. Such innovations will change the way content is produced, distributed and monetized in future. Early adoption of new technologies will help platforms gain a foothold in the evolving entertainment landscape. This presents a huge opportunity for forward-looking players to thrive amid digital transformation.
Link: https://www.coherentmarketinsights.com/market-insight/video-on-demand-service-market-4861
Key Developments:
- In July 2022, Netflix Inc., a prominent streaming service provider, revealed a collaboration with Microsoft Corporation, a global technology company, to create advertising tools and sales strategies for its newly introduced ad-supported subscription plan. This initiative targets attracting subscribers from regions where consumers typically favor premium subscriptions, enriching Netflix's lineup with a tier called "Basic with Ads."
- In May 2022, Amazon Prime Video, a prominent streaming service, unveiled a multi-film licensing agreement with Sajid Nadiadwala's Nadiadwala Grandson Entertainment (NGE). As per the deal, the platform will feature NGE's forthcoming films shortly after their theatrical release, accessible to all Prime members. Additionally, these films will be available for rental to all Amazon customers, irrespective of Prime membership, during the 'Early Access Rental' period.
- In January 2023, FOX Entertainment, a prominent television network, and Hulu, a leading streaming service owned by Disney, announced a multi-year content partnership. This agreement provides Hulu with in-season streaming rights to FOX's extensive lineup of primetime entertainment, featuring popular series such as Family Guy, The Cleaning Lady, The Masked Singer, and Next Level Chef. These shows will be available on Hulu for streaming the day after their initial broadcast. Furthermore, the partnership includes a strategic marketing collaboration, ensuring FOX and Hulu brands are aligned across all promotional channels to enhance visibility and engagement for live and on-demand FOX content.
- In June 2022, Amazon Prime Video, an OTT streaming platform, joined forces with AMC Networks, a U.S.-based entertainment company, to bring their content to Prime Video Channels in India. Under this partnership, Prime Video Channels will provide access to the ad-free subscription service AMC+ and AMC's streaming platform Acorn TV through subscription plans.
Key Players:
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), and Verizon Communications Inc.
