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Global Trends in Video on Demand (VOD) Technology : Internet Segment Propels Growth of VOD Consumption Worldwide

  • February 2015
  • 60 pages
  • Frost & Sullivan
Report ID: 2757357

Summary

Table of Contents

Key Findings

•While “all you can eat” subscription packages find the highest favor among OTT viewers today, pay-per-view VOD is seeing increasing success as audiences seek out new-release TV and movie content for anytime, anywhere viewing.
•The difference between experiences on a managed set-top box (STB) and an unmanaged connected device is blurring, with the result that nearly all pay TV providers in advanced markets already offer or are urgently working to offer OTT and VOD services.
•Uptake is less prevalent in less-advanced economies where price tolerance and broadband penetration are low, but over time this gap is expected to close. Sports programming, in particular, is a powerful driver for VOD in these countries.
•Though cable continues to struggle with its legacy footprint of MPEG-2-only STBs, IPTV and satellite have enjoyed a more agile ability to innovate. Cable service providers, pressured to combat cord cutters and more attractive IPTV services, are fighting back in earnest now; nonetheless, the Internet remains the most exciting arena for OTT and VOD growth.
•Geographically, the United States is the most significant market, with the United Kingdom, France, South Korea, and China accounting for a significant chunk of subscribers as well as streams.
•While HEVC presents a potential long-term threat, AVC’s de-facto standard for all VOD compression has been hard won and is solidly backed by vendors and content creators alike.

VOD Market—An Overview

•Video on demand (VOD) solutions enable users to watch long-form video content on demand, as opposed to the content received through traditional live linear programming.
•VOD content has traditionally comprised 2 types: movies and catch-up television (TV) programming. Increasingly, special one-time content such as sporting events, musical concerts, and content tailored for expatriate audiences is being added to the mix.
•VOD can be received as part of a cable, satellite, or IPTV subscription, or it can be directly received via the Internet through an online video service provider. Also, some niche pay DTT service providers offer OTT and VOD content—these are counted in the Internet vertical.
•Increasingly, traditional pay TV service providers are setting up alternative Internet-only VOD services for customers outside their coverage area to access their content; this is beginning to quickly blur the boundaries of how the VOD market is segmented and measured.
•Because of the prevalence of higher-end smartphones and maturing cell networks, there has been a resurgence in consumption of pay-per-view video on mobile phones, particularly noteworthy in countries such as India where per-capita cell phone penetration is nearly x % but pay TV reaches less than x % of households. The numbers are not yet significant enough to show in the top suppliers list, but this will add a new dimension to the VOD market in short order.

Cable Segment:
•The largest market for cable VOD providers is the United States. Comcast, with 35.6% of cable VOD subscribers, remains the leading provider of VOD services. Time Warner Cable (TWC) comes a distant second.
•Other key VOD vendors in the cable segment include Kabel Duetschland, the biggest cable provider in Germany, Unity Media, Cox, Charter, Cablevision Argentina, and Numericable of France.

IPTV Segment:
•French participants, Orange TV-France Telecom, and Free-Iliad, dominate the IPTV segment for VOD services. AT&T U-verse, Olleh TV by Korea Telecom, and FiOS by Verizon are other key VOD service vendors in this market.
•Outside of France, the United States and the United Kingdom, China, and South Korea continue to see rising IPTV VOD subscriber growth.

DTH/Satellite Segment:
•The largest market for satellite VOD services is the United States.
•Much of the growth in this segment comes from India wherein several small participants like Tata Sky, Airtel, and Sun Direct compete. The United Kingdom, Germany, and Latin America (led by Brazil) are other large and growing markets in this space.

Internet Segment:
•The Internet has arguably become the latest and most democratic alternative for pay TV service delivery. The path that Netflix and Apple forged is becoming a highway crowded with bandwagons. Advertising-supported streaming is widely prevalent, but is not counted here.

Forecast Assumptions

•For service providers that offer “all you can eat” streaming services for a fixed subscription fee, subscribers are counted. For service providers that offer content on a pay-per-view basis, the number of titles sold is counted.
oFor clarity, the number of streams viewed by “all you can eat” subscription clients is not included in the title-by-title section.
•The forecasts for the next x years are derived using known growth trends for the specific types of pay TV services within a provider’s home country as well as projected growth in VOD and online video consumption.
•Nearly every pay TV service provider—cable, satellite, or IPTV—also offers VOD directly over the Internet in a quasi-managed or purely unmanaged fashion. However, these streams are not counted in the Internet segment; such stream counts remain assigned to the pay TV provider.
•A new trend in STBs where home media gateways are used to acquire VOD content must be noted; these gateways then transcode content and deliver it to unmanaged devices such as tablets and laptops in the home.
oThis trend is nascent but is expected to grow over time. Home-internal streams are not included in the VOD market sizing.

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