Forget Normal Video-on-Demand—Subscriptions Are the Way to Go - eMarketer

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Forget Normal Video-on-Demand—Subscriptions Are the Way to Go

SVOD subscribers sign up for access to large content libraries

August 27, 2014

As consumers spend more time with long-form digital video such as TV shows and movies, as opposed to shorter clips, streaming services’ subscriber numbers continue to rise. This growth is driving increases in digital and total home entertainment rental and sales revenues in the US, based on recent research.

US Home Entertainment Rental and Sales Revenues, H1 2012, H1 2013 & H1 2014 (millions and % change)

According to data released earlier this month by the Digital Entertainment Group, revenues from US subscription video-on-demand (SVOD) streaming services—such as Netflix—totaled more than $1.91 billion on in H1 2014, the highest out of all digital formats. This represented year-over-year growth of 26.17%—and was one of just two formats overall to see an increase, with electronic sell-through the other. Total digital revenues rose 16.67% between H1 2013 and H1 2014—no thanks to regular video-on-demand, which saw a decrease of 5.63%.

March 2014 polling by GfK looked at the main reasons SVOD subscribers had signed up for subscription streaming services and found that the availability of large content libraries was a key driver in adoption: 58% of US SVOD subscribers said being able to access a back catalog of movies was a top reason for signing up, while 56% said the same about TV programs. Being able to watch content at the time of one’s choosing was important, too (41% of respondents).

Viewing multiple episodes in a row—otherwise known as binge-viewing—was also popular (42%), and Q1 2014 data from Centris Marketing Science showed that SVOD was actually the second most popular method US TV viewers used to binge-watch, cited by 25% of respondents and only trailing DVR (28%).

Compared with UK SVOD subscribers, GfK found that those in the US typically cared a lot about access to TV content, while UK respondents focused more on movie viewing.

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