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Global VOD Revenue to Climb 58%

24 Jul, 2011 By: Erik Gruenwedel

Web-based TV revenue to overtake digital terrestrial television revenue by 2012

Worldwide revenue from video-on-demand movies and TV programs will reach $5.7 billion in 2016, up 58% from revenue of $3.6 billion in 2010, according to a new research report.

The tally does not include pay-per-view sports events, adult entertainment or subscription-based VOD services such as Netflix, Amazon Prime and Google, among others, according to London-based Direct TV Research Ltd.

The United States will more than triple runner-up Italy with more than $1.8 billion compared to $592 million. China, the world’s most-populated country, is ranked third with $509 million in VOD revenue.

By region, North America and Western Europe will continue to supply two-thirds of global VOD revenue by 2016, though this is down from 80% in 2010. That said, VOD TV revenue will triple in the Asia Pacific region over the same period to reach US$1.2 billion. China will provide a lot of this growth.

By platform, digital cable will generate $2.6 billion globally – double what it generated in 2010. Satellite TV will contribute $1.7 billion as digital cable widens its revenue growth and market share, according to the report.

Internet-based TV (IPTV) is projected to overtake digital terrestrial TV (DTT) in revenue next t year to become the third largest platform globally. Indeed, VOD revenue from DTT is expected to be largely confined to Western Europe.

Simon Murray, author of the report, said there is little evidence free VOD offerings by cable and satellite operators are driving consumers to transactional VOD or compensating for increasing number of homes downsizing their monthly pay-TV bills.

“There is little evidence to suggest that these free services actually encourage subscribers to pay for on-demand titles,” Murray wrote. “In fact, it may be harder to convince households to pay for on-demand services if they have become accustomed to receiving free on-demand titles.”

The analyst said Web-based services such as Hulu and TV.com, among others, are often easier to use than TV-based ones, allowing the viewer greater flexibility and a better environment to watch repurposed programming.

Although viewers’ interaction with connected TV services remains formative, the most vulnerable linear channels to [VOD] are those that rely heaviest on reruns, including TV syndication, according to the report.

“Channels – regardless of platform – providing the freshest content will remain the most popular,” Murray wrote.

About the Author: Erik Gruenwedel

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