The OTT subscription online video-on-demand market in Europe will keep growing over the next five years, according to Kagan, a media research group within S&P Global Market Intelligence.
The research company is projecting the market will reach $6.8 billion in revenue in 2022, up from $3.9 billion in 2017. The main factors contributing to this development are the presence of localised Netflix content throughout the region, the expansion of Amazon Prime Video as a stand-alone service, the debut of international OTT services such as HBO and Showmax, as well as the strengthening of offerings from local media providers.
According to Kagan’s estimates, total paid subscriptions across Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, United Kingdom, Poland and Russia will grow from 39.3 million in 2017 to 60.8 million in 2022, a CAGR of 9.1%. This number represents paid subscriptions to online video services and excludes registered accounts through sale promotions or multi-play bundles.
Netflix leads in active paying users in all countries, except for Germany, Poland and Russia. The company has been investing heavily in local content in the majority of the European markets where it operates. Amazon Prime Video leads in Germany, having capitalised on the earlier success of Amazon Prime.
In Eastern Europe, local services have been able to dominate, even when facing bigger international entrants. The majority of these services adopt a hybrid VOD model focusing predominantly on advertising to generate revenue. The UK has Europe’s highest number of SVOD subscriptions, more than double those in Germany in 2017—Kagan expects this to continue over the next five years
France, which currently ranks fourth behind the Netherlands, is expected to outperform its neighbour and capture the third spot at the end of 2019, due to the French market having only 10.3% SVOD-to-broadband-home penetration, compared to 45.1% in the Netherlands in 2017, leaving room for further growth.
SVOD services are especially popular in the Nordics, with Denmark, Norway and Sweden ranking as the countries with the highest penetration rates, ranging from 76.2% to 86.1% in 2017. This can be attributed to the countries’ high percentage of English-speakers, as well as disposable incomes higher than the European average. The UK follows with 59% SVOD-to-broadband-home penetration.
Looking at 2017 estimated GNI PPP indexes by country, combined with the average monthly cost of a subscription to a video-on-demand service, provides an indicator of SVOD affordability for a market’s average household. Even though Denmark is the country with the highest average monthly subscription cost of $13.41, it is the Portugal market where SVOD services are the least affordable to subscribe to, with an index of 0.4%.
Russia is the most affordable country to pay for a monthly online video subscription, with an index of 0.06%. This is influenced by alarmingly high levels of piracy, income inequality, prevalence of free ad-funded services and a dominant multi-channel sector.
