Online Video Subscription Growth Not Guaranteed, Says Omdia

Though the global outlook for online video subscriptions remains “very positive,” Netflix projections of losing 2 million more subscribers in Q2 (see 2204190066) is ample warning that online video services “cannot take growth for granted,” reported Omdia Monday. Netflix reports second-quarter results July 19.

Omdia forecasts that online video subscriptions will surpass 2 billion globally in 2027, when pay-TV subscriptions will still exceed 1 billion worldwide, said the research company. Though online video subscription numbers “are growing just about everywhere,” the health of pay TV is “much more mixed,” it said. Omdia counted 55 countries in which pay-TV subscriptions are growing, plus 41 markets where they are declining and five markets where growth is “static,” it said.

Omdia estimates that online video subscriptions reached 1.34 billion globally at the end of 2021, up 17.7% from a year earlier, it said. It’s forecasting further 10.5% growth in 2022 to 1.48 billion by year-end, it said. New services are “continually” entering the market, while major players are only “part of the way through” their global rollouts, it said: “This means the market will continue to expand for several years.”

Online video services “are continuing to experience impressive growth levels and there is a lot more to come,” said Omdia analyst Adam Thomas. Disney+ has enjoyed “an incredibly successful launch but there are several more attractive territories for it to enter over the next couple of years,” he said. “The same goes for Paramount+, Peacock and several others.”

There's “one small note of caution” to heed about online video subscription growth because “a price-sensitive public has come to expect a lot of bang for their buck,” said Thomas. Streaming services are doing a “balancing act” between content costs and pricing, he said. That’s “a tricky one to navigate and we’ve already heard from Netflix that it expects to lose 2 million customers in this quarter,” he said. “It is quite clear that constant growth for online video is by no means guaranteed.”

Global pay-TV subscription numbers grew 0.6% in 2021 to 1.03 billion, said Omdia. With competition from online video intensifying, it expects the pay TV market “to exhibit slow decline looking ahead,” it said, forecasting subscriptions to fall below 1 billion in 2027.

Though online video subscription numbers are growing “just about everywhere,” the scenario for pay TV varies “a great deal” from country to country, said Omdia: “Over the next five years Omdia expects those contrasting fortunes to continue, with countries like Indonesia continuing to post solid increases, while others -- most notably the U.S. -- seeing ongoing decline.