Global subscription video on demand (SVoD) users hit 1.5 billion in 2022, overtaking the number of pay TV subscribers, which fell to 1.4 billion, for the first time, according to GlobalData, a leading data and analytics company.
GlobalData’s latest report, ‘Video Streaming – Thematic Intelligence’, reveals that the global market for SVoD, a video streaming service where viewers pay a monthly fee to access a library of content, was worth $103 billion in 2022. It is estimated to expand to $155 billion by 2027, registering a compound annual growth rate (CAGR) of 8.5% between 2022 and 2027. By contrast, revenue from traditional pay TV services (which include cable TV, satellite TV, and terrestrial TV) will decline from $218 billion in 2022 to $194 billion by 2027.
Rupantar Guha, Principal Analyst at GlobalData’s Thematic Intelligence team, comments: “The video streaming industry enjoyed strong growth during the pandemic but has entered choppier waters later. This is due to a post-pandemic shift in viewing habits, rising inflation in several markets, and so-called subscription fatigue (where consumers feel overwhelmed by the number of subscription services they manage). These factors led Netflix to lose subscribers for the first time in a decade in the first quarter of 2022.”
The number of video streaming subscribers continues to rise while the pay TV market stagnates. Between 2018 and 2022, global SVoD subscriber volume expanded at a CAGR of 30%, compared to 4% for pay TV subscriptions. This is primarily attributable to the cord-cutting trend as consumers transitioned from traditional cable, satellite, and terrestrial TV to SVoD platforms.
Guha continues: “The COVID-19 pandemic also acted as a catalyst for SVoD adoption as stay-at-home measures contributed to increased household demand for digital entertainment solutions worldwide.”
The push for exclusivity on SVoD platforms has intensified the content wars, and video streaming companies spend eye-watering amounts on content. Disney, for instance, spent $33 billion in 2022 alone, which equates to over five times the BBC’s entire $6 billion budget.
Guha concludes: “Streamers have begun to tighten their belts, but exclusive content remains a differentiator, and the industry remains under pressure to spend heavily to retain consumers. Subscription-based streaming platforms have started shifting towards a hybrid model incorporating advertising-based video on demand (AVoD) or free ad-supported TV (FAST) to attract cost-conscious subscribers. This is unlikely to balance their books. The most likely outcome is more industry consolidation.”
