What's Driving Subscription OTT Growth?

This week, we're taking a look at the key digital trends worldwide, based on our recent Global Media Intelligence report. First up, we're taking a look at subscription OTT users.

This year, eMarketer expects 170.1 million people in the US will use a subscription OTT service, like Netflix—making up 60.8% of internet users.

That falls in line with other studies, like the H1 2018 survey from GlobalWebIndex, which found that nearly 70% of internet users have used a SVOD service in the past month. (GlobalWebIndex's penetration is higher than eMarketer's because it polled respondents ages 16 to 64, while eMarketer's forecasts encompass all ages.)

By and large, more Gen Xers and baby boomers are following in millennials' lead and adopting subscription video services. "Whether they’re subscribing themselves or using family-shared accounts—we count all viewers whether or not they’re the one subscribing—older adults are adding these paid-for video services as part of their regular entertainment diets," said Chris Bendtsen, senior forecasting analyst at eMarketer.

That doesn’t necessarily mean TV is being replaced among the older cohorts as it is with millennials. But, with smart TVs and connected TV devices, it’s becoming increasingly easier to watch both live TV and on-demand video.

The subscription video landscape as a whole is growing in large part because of original content And all the platforms individually are succeeding because of it, despite competition.

Netflix is enticing the most first-time subscribers with their original offerings, but Hulu, Amazon Video and other players, are also growing as existing on-demand viewers add a second and even third service.

"Consumers don’t seem to be price sensitive to adding multiple services because they don’t want to be the only one in their family or friends group that hasn’t seen the latest hit original show, now matter which platform it’s on," Bendtsen said.

Subscription over-the-top (OTT) video: Paid subscription-based streaming video content viewed via any app or website that bypasses traditional distribution; examples include Amazon Video, HBO Now, Hulu, Netflix, Sling TV and YouTube Red.

Netflix is still growing in the US, and continues to be the first subscription service that new users try.

"Netflix reported more than 5.5 million paid membership additions for Q3 2018 vs. Q3 last year, and that doesn’t even count the new viewers coming from multiple log-ins and shared passwords," Bendtsen said.

We expect there will be 147.5 million Netflix users this year, making up more than half (52.8%) of internet users. In contrast, we estimate there will be 88.7 million Amazon Video users and 55.0 million Hulu users in 2018.

Last week, eMarketer, in collaboration with Starcom Worldwide and GlobalWebIndex, released its annual Global Media Intelligence Report on key digital trends worldwide, like subscription OTT. While the full report is only available to eMarketer PRO subscribers, non-subscribers can download the Executive Summary.

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