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DIGITAL MEDIA: VIDEO-ON-DEMAND DATA AND ANALYSIS WITHIN THIS REPORT Overview Pages Subject 03 – 05 Detailed overview › › › Market KPI comparison by region in charts Market KPI comparison by region in tables Biggest market is the US with US$9.5 billion in 2016 China has the highest average growth rate of 25.5% to 2021, but will stay the smallest market Key Takeaways Video accounts for 16% of the Digital Media market Video-on-Demand as part of the Digital Media market Global Video-on-Demand revenue of US$24.2 billion in 2021 Best practice and deep dive › › 12 – 14 Video Streaming is growing fastly over all markets Framework › › 10 – 11 Future developments, Assumptions and sensitivity KPI-Comparison › › 08 – 09 Customer benefit, Market size Video-on-Demand is divided into Downloads, Streaming and Pay-per-View Netflix Netflix revenue per user Netflix has over 83 million members in over 190 countries in 2016 Only Netflix users from the US provide a profit Structure, contacts and imprint 2 © Statista Digital Market Outlook 06 – 07 Market scope Essentials DIGITAL MEDIA MARKET Market focus: Video on Demand Video on Demand Fashion Streaming Video Download Pay-per-View FoodVideogames & Personal Care ePublishing Furniture & Appliances Toys, Hobby & DIY Focus Segment Other Reports 3 © Statista Digital Market Outlook Digital Music Electronics & Media US IS THE BIGGEST MARKET WITH A PIONEERING ROLE – CHINA’S ROLE IS SMALL Video-on-Demand (VoD) is defined as premium digital video content, distributed over the Internet. This includes three fee-based business models: Rentals as a single transaction or Pay-per-View, respectively; subscription-based Video Streaming services and digital purchases of Video Downloads (electronic-sellthrough or EST). Pay-per-View is defined as timelimited access to premium video content that requires a usagebased one-time payment. Content includes movies, TV shows or series that can be downloaded or streamed to various devices for a pre-determined period of time. The prices for Pay-per-View offers are usually lower than for Downloads. Other common expressions for Pay-per-View are Transactional-VoD or TVoD. Video Streaming services offer unlimited access to a broad selection of different genres and Market size titles for a subscription-fee. Movies and TV series can be streamed to various supported connected devices. As in Music Streaming, the video content is delivered without the need for downloading files; the content is played from an external source. Well known Video Streaming services are Netflix or Amazon Prime Instant Video. Video Streaming is also known as Subscription-based-VoD and SVoD. Video Download means premium digital video content that is purchased in a one-time transaction and is permanently accessible as a digital video file through cloud-based or offline storage. Consumers are purchasing an unlimited usage right to a specific video file. Electronic-Sell-Through (EST) or Download-to-own can be used synonymously with Video Downloads. The global Video-on-Demand market size is about US$16.3 billion in 2016 and accounts for 16% of the Digital Media market. With this share, Video-on-Demand is significantly bigger than Digital Music and on a similar level as ePublishing. 85.6% of the global VoD market is covered by the United States, China and Europe. The cumulated market size of all three regions is US$14.0 billion. With US$9.5 billion in 2016, the market in the United States is dominating the global VoD market. It accounts for 58.5% of the total market on its own. Video Streaming is the biggest segment, with US$5.5 billion in 2016, while Video Downloads and Pay-perView are at a similar level of US$2.0 billion. The market in Europe has a volume of US$3.5 billion. The share of Video Streaming is, with 61.6%, even higher than in the US. Pay-per-View and Video Downloads are following the Streaming market at some distance with US$0.8 billion and US$0.6 billion in 2016, respectively. The Chinese Video-on-Demand market is different. We can observe a lack of willingness to pay for digital media content. The total market is, with US$0.9 billion, not even a tenth of the size of US market. Although a lower price level in China has to be taken into account, the main reason for the small market is a very low adoption rate of paid Video-onDemand services. Only 3.1% of Chinese Internet users are paying for Video Streaming, although Streaming is the biggest segment, with US$0.6 billion in 2016. The Pay-per-View market is, with US$0.1 billion in 2016, the smallest segment. With US$0.3 billion, Downloads account for 27.4% of the Chinese VoD market. 4 © Statista Digital Market Outlook Customer benefit VIDEO STREAMING IS GROWING FAST – DIFFERENT DEVELOPMENTS OF PAY-PER-VIEW The Video market is growing with a CAGR of 8.3% to 2021. A steady growth of Video Streaming in all regions is the main driver for this development. Due to its pioneering role, first saturation effects in the US market can be observed. It is the slowest growing market with a CAGR of 3.7% to 2021. The expected market size is US$11.4 billion in 2021. Nevertheless, Video Streaming is growing with an average of 5.1% per year. A significantly growing user base is responsible for this growth, while the average revenue per user is growing moderately . Contrary to the other regions, Payper-View revenue is declining very slightly with a CAGR of -0.4% to 2021, while Download sales are increasing with 3.6% per year in the same time frame. In Europe, for instance, the Payper-View market is growing with an average of 5.7% per year, while Assumptions and sensitivity the Download stagnating. market is Pay-per-View is growing in Europe, while it is declining in the United States Video Streaming, however, is growing fast with a CAGR of 10.4% to 2021, although growth will slow down over the years. The yearover-year growth from 2020 to 2021 will be +5.3%, while it is 14.0% from 2016 to 2017. The total European market will pass US$5.1 billion in 2021. Again, the market development is mainly determined by a changing user base, while the average revenue per user does only grows moderately. The Chinese Video-on-Demand market has the highest average annual growth rate of 25.5% to 2021 and will reach US$2.9 billion in 2021. 1: CAGR: Compound Annual Growth Rate/ average growth rate per year. The global Video-on-Demand market is mainly driven by a fast and constant growth of Video Streaming, while Video Downloads and Pay-per-View are developing contrarily in Europe and the US. Video Streaming services in the US usually have more relevant content than in other countries. We assume that European Videoon-Demand users have to fall back on Pay-per-View offers, as specific titles are not available on Video Streaming services due to territorial restrictions within corresponding license agreements. According to that, there is no need for Pay-per-View in the US in the same way as in Europe. The Chinese market has to be seen differently. The willingness to pay for Video-on-Demand content is very low and most offers are ad-based or even on a semi-legal basis. As in other Digital Media markets, we expect a noticeable impact of Chinese government’s increasingly severe control of copyright. New copyright protection laws from July 2015 will drive the Video-on-Demand market in China. Ad-based video streaming is not considered as Video Streaming according to our definition. Nevertheless, the subscriber growth stalled after services raised prices, which suggests a noticeable price sensitivity of Video Streaming users. Therefore, it is conceivable that currently subscription-based video services offer suitable content refinanced by using advertising in the future. We cannot observe concrete developments on this path yet, but we have to keep an eye on this possibility. 5 © Statista Digital Market Outlook Future developments VIDEO-ON-DEMAND IN MA JOR REGIONS Market KPI comparison by region United States Revenue forecast Europe +3.7% p.a. in million US$ by region 11,448 9,529 Download: China 2,484 2,078 Streaming: 5,527 +8.0% p.a. 1,923 1,888 2016 2021 934 256 76 602 2016 2,011 566 3,485 2,904 Pay-per-View: Revenue per user 5,120 +25.5% p.a. 7,077 556 536 3,531 2,155 774 357 1,023 2016 2021 2021 in US$ by region 2016 12.4 82.9 2016 24.4 22.4 Source: Digital Market Outlook 2016 53.4 20.3 13.1 86.3 24.5 2016 3.4 49.2 2021 34.7 2021 33.0 24.7 6.2 2021 55.7 19.6 6 © Statista Digital Market Outlook 50.2 VIDEO ON DEMAND IN MA JOR REGIONS Market KPI comparison by region United States China Europe Revenue CAGR1 16 – 21 2016 2017 2018 2019 2020 2021 CAGR1 16 – 21 2016 2017 2018 2019 2020 2021 CAGR1 16 – 21 10,000 10,436 10,825 11,162 11,448 +3.7% 934 1,309 1,730 2,157 2,557 2,904 +25.5% 3,497 3,925 4,312 4,644 4,914 5,132 +8.0% 1,923 1,915 1,908 1,901 1,894 1,888 -0.4% 76 120 175 237 299 357 +36.3% 774 847 906 953 992 1,023 +5.7% mUS$ 5,527 5,914 6,270 6,584 6,853 7,077 +5.1% 602 888 1,198 1,502 1,776 2,011 +27.3% 2,155 2,506 2,831 3,114 3,343 3,531 +10.4% mUS$ 2,078 2,170 2,258 2,340 2,415 2,484 +3.6% 256 301 356 419 481 536 +15.9% 556 560 563 565 566 566 +0.4% Unit 2016 2017 2018 2019 2020 2021 CAGR1 16 – 21 2016 2017 2018 2019 2020 2021 CAGR1 16 – 21 2016 2017 2018 2019 2020 2021 CAGR1 16 – 21 Total: m 109 104 102 103 105 107 -0.4% 43 54 66 79 90 101 +18.6% 63 66 69 73 77 80 +4.9% Pay-per-View: m 79 78 78 78 77 77 -0.5% 22 30 38 45 52 58 +21.1% 38 42 45 48 50 52 +6.2% Streaming: m 67 71 74 77 80 82 +4.1% 27 38 51 62 73 82 +24.8% 40 46 52 57 60 63 +9.0% Download: m 41 43 45 47 49 50 +4.0% 21 24 28 33 37 41 +14.6% 16 16 17 17 17 17 +1.2% Segment Unit 2016 2017 Total: mUS$ 9,529 Pay-per-View: mUS$ Streaming: Download: 2018 2019 2020 2021 Segment 1: CAGR: Compound Annual Growth Rate/ average growth rate per year. Source: Digital Market Outlook 2016 7 © Statista Digital Market Outlook Users KEY TAKEAWAYS Market sizing subjects for Video on Demand Market size Growth rate Trend signals ? › US is dominating the global Video-onDemand market with US$9.5 billion in 2016 › Video Streaming has, with 57.9%, highest share of the Video-on Demand market › China Europe › Smallest of the three markets with US$0.9 billion in 2016 › Total market volume is US$3.5 billion in 2016 › Video Streaming is the biggest segment and accounts for 64.5% › Video Streaming accounts for 61.6% First saturation effects in the US market › Highest growth rate with a CAGR of 25.5% › Europe has a relatively high growth rate with a CAGR of 8.0% to 2021 › Total market is growing with a CAGR1 of 3.7% to 2021 Strong growth over all segments › › Growth is mainly driven by Video Streaming (+5.1% p.a.) › › Video Streaming is growing extraordinarily strong with a CAGR of 10.4% to 2021 › Total market volume will reach US$5.1 billion in 2021 › Noticeable price sensitivity of Video Streaming users › New copyright protection laws from July 2015 will drive the revenue › › Subscription-based video services might offer suitable content refinanced by using advertising in the future › Nevertheless, Chinese consumers are not willing to pay for Video-onDemand yet A pursued genuine internal European market for digital content might help to avoid territorial restrictions within the European Union › Small conversion rates to paid content from under 2% 1: CAGR: Compound Annual Growth Rate/ average growth rate per year Source: Digital Market Outlook 2016 Total market volume will reach US$2.9 billion in 2021 8 © Statista Digital Market Outlook United States Video-on-Demand Digital Media global segment size and growth rates Global1 Digital Media market revenue CAGR2 16 – 21 in million US$ by segment 125,403 +6.6% p.a. 23,888 +8.1% p.a. 91,102 13,197 16,163 Video-on-Demand: Digital Music: Games: 67,096 +5.8% p.a. 50,521 +6.8% p.a. ePublishing: 15,274 2016 1: Only includes countries listed in the Digital Market Outlook 2: CAGR: Compound Annual Growth Rata/ average growth rate per year Source: Digital Market Outlook 2016 21,222 2021 9 © Statista Digital Market Outlook Digital Media +7.6% p.a. 9,144 BEST PRACTICE: Company profile Footprint Background Netflix, Inc. (NASDAQ: NFLX) is an entertainment company based in Los Gatos, California. The Video Streaming service Netflix is known for today, started in 2007. In the early years after Netflix's founding, the company grew by starting in the DVD-by-mail business. Since 2013, Netflix produces own film and television series under the label “Netflix Original”. DVD-by-mail means renting physical video carriers for delivery by mail. Analyst opinion Revenue: Growth (revenue): Net income: Paying subscribers: Content consumption p.d.: founded: US$6,779 million (2015) 18.8% YoY (2015) US$122 million (2015) 83 million (Jul 2016) 125 million hours 1997 Source: Digital Market Outlook 2016, company information Netflix could not match their forecasted membership growth in the second quarter of 2016. The main reason was an increase in price. Price sensitive users might have switched to cheaper competitors. Current rumors say that Disney might takeover Netflix. Such a takeover could help it to persist in this competitive market. Rumors are based on climbing shares. Furthermore, some clues already indicate a close connection between Netflix and Disney. Many “Netflix Original” series, for instance, are under license from Marvel which is owned by Disney. In addition, a lot of other Disney content is streamable exclusively at Netflix. 10 © Statista Digital Market Outlook Overview Today, Netflix has over 83 million members in over 190 countries, including more than 47 million in the United States. ONLY USERS FROM THE US PROVIDE A PROFIT Netflix profit/loss per user per month in US$ USA 2,7 2,5 2,2 1,9 -0,4 -0,6 -0,6 -0,9 -1,0 Source: company information Q3 2014 Q4 2014 -1,2 -1,3 -1,4 Q2 2014 2,9 2,2 -0,9 Q1 2014 2,9 2,8 2,7 Q1 2015 Q2 2015 Q3 2015 Q4 2015 -1,0 Q1 2016 Q2 2016 11 © Statista Digital Market Outlook 2,1 International VIDEO-ON-DEMAND REVENUE STREAMS Market Structure and definition Segment Sub-segments Pay-per-View Out of segment Transactional-Video-on-Demand services or Pay-perView offers. TVoD is defined as time-limited access to premium video content that requires a usage-based one-time payment. Content includes movies, TV shows or series and can be downloaded or streamed to various devices for a pre-determined period of time. Video Advertising Ad-based content and Video Streaming service Pay-TV Video Downloads Video Downloads, Electronic-Sell-Through or Downloadto-own describes premium digital video content that is purchased in a one-time transaction and is permanently accessible as a digital video file through cloud-based or offline storage. In scope Other segment Use-generated content Out of scope 12 © Statista Digital Market Outlook Video-on-Demand Subscription-based-Video-on-Demand services, e.g. Netflix and Amazon Prime Instant Video, offer unlimited access to their content libraries for a subscription-fee. Movies and TV series can be streamed to various supported connected devices. ABOUT DIGITAL MARKET OUTLOOK 9 Markets, 34 segments & 85 sub-segments Digital Media Connected Car Video-on-Demand, Digital Music, Video Games, ePublishing Connected Hardware, Vehicle Services, Infotainment Services FinTech Digital Payments, Business Finance, Personal Finance eTravel Smart Home Details › › › › 50 countries › User count & penetration › Comparable data Direct access & downloads 7-Year coverage: 2015 – 2021 Revenue forecasts Home Automation, Security, Home Entertainment, Ambient Assisted Living, Energy Management e-Commerce eServices Event Tickets, Fitness, Dating Services, Food Delivery Fashion, Electronics & Media, Food & Personal Care, Furniture & Appliances, Toys, Hobby & DIY eHealth Digital Advertising Diabetes, Hypertension, Heart Failure Banner Ads, Video Ads, Search Ads, Social Media Ads, Classifieds Exclusive part of the Statista Corporate Account Access to more than 1,000,000 statistics and all digital markets more moreinformation information 13 © Statista Digital Market Outlook Online Travel Booking, Mobility Services IMPRINT Contacts and author Sebastian Buss Analyst Sebastian Buss graduated in Business Administration and Business Psychology in Hamburg, Germany with a specialization in Consumer Behavior and Market Psychology. Before his time at Statista he gained experiences in digital media markets with a focus on the music industry. He is working for Statista as a specialist for digital markets, trend monitoring and data analysis. E-MAIL [email protected] WEB statista.com/outlook Released: October 2016 Imprint Statista ▪ Johannes-Brahms-Platz 1 ▪ 20355 Hamburg ▪ +49 40 413 49 89 0 ▪ www.statista.com Disclaimer This study is based on survey and research data of the previously mentioned sources. The forecasts and market analysis presented were researched and prepared by Statista with great care. For the presented survey data, estimations and forecasts Statista can not assume any warranty of any kind. Surveys and forecasts contain information not naturally representing a reliable basis for decisions in individual cases and may be in need of further interpretation. Therefore Statista is not liable for any damage arising from the use of statistics and data provided in this report.