Spending on consumer video media services will grow 4.2 percent to $314 billion in 2017, according to Gartner.
Pay-TV service — with $282 billion spending in 2017 — is the largest spending segment and will represent 90 percent of the total consumer video media services market.
Gartner said emerging Asia Pacific with 20.8 percent and Middle East and North Africa with 17.4 percent will record the highest growth in end-user spending on consumer video media services.
Earlier this year, China Mobile started offering its free pay-TV service to its premium subscribers for the first two years of a new contract.
“This will lead to an influx of new subscribers in the pay-TV marketplace. However, it will also bolster price competitiveness and put negative pressures on the average revenue per user (ARPU) of the overall pay-TV market,” said Fernando Elizalde, principal research analyst at Gartner.
Internet-delivered linear TV services have launched in India and the Middle East. These services will commence across all emerging regions by 2018.
“Incentivized by lower prices, one million households in emerging regions will enter the pay-TV market through an internet TV service by 2020. The difference in the price of these packages compared with traditional pay-TV packages will also put downward pressure on ARPUs overall.
Transactional video on demand (T-VOD) offers consumers the ability to access a variety of content, from either managed pay-TV providers or over-the-top (OTT) companies such as Amazon, Google or Apple.
“OTT-VOD sources are changing the landscape,” said Derek O’Donnell, senior research analyst at Gartner.
The Gartner report said OTT-VOD services are the fastest-growing segment in the VOD landscape and eroding pay-TV providers’ share of revenue. OTT-VOD sources began outperforming traditional pay-TV sources in 2016.
The availability of premium-priced 4K content will increase end-user spending on T-VOD content in mature regions, from $160 million in 2017 to $400 million by 2020.
In emerging regions, increased competition in the T-VOD marketplace from unmanaged providers and increased threats of piracy will put negative pressure on T-VOD prices. End-user spending on T-VOD services in emerging markets will decrease gradually each year, starting in 2017, by about $60 million to almost $445 million by 2020.
Consumer spending on subscription-based video on demand (S-VOD) services will grow 28 percent to $18.7 billion in 2017.
The average consumer adoption of S-VOD services is 10 percent in 2017, with an average ARPU of $7.41. The highest ARPUs are in Japan ($12.10), Mature Asia Pacific ($10.84) and North America ($9.60).
Gartner said consumers will not subscribe to more than three services. This is because of price and content discovery fatigue. Consumers have to go through each application separately to find content, which can create fatigue.
Universal search is the key to driving penetration, which will allow consumers to search for content across all their S-VOD services.
Currently, there is a market for niche subscription video services and streaming providers.
