US average SVoD spend almost doubles in three years

Average monthly spend on internet-based subscription video-on-demand services by US households almost doubled in the three years between 2012-15, according to research by Parks Associates.

The average US broadband household spent US$6.19 (€5.67) a month on SVoD services in 2015, up from US$3.71 in 2012, according to Parks Associates’ Content Strategies: Survival in the New Video World report.

The research group found that average subscription prices varied from US$7 to US$10, with some niche services being available for under US$5. While SVoD accounts for less than a quarter of overall spending on video, it nevertheless far exceeds purchases and rental of digital video, with the average household spending less than US$1 a month buying and less than US$1 renting digital video products.

“Multiple content players have held onto traditional content windowing strategies for years, but OTT technologies and emerging business models have finally forced these companies to experiment with new windowing strategies,” said Glenn Hower, research analyst, Parks Associates.

He said that new models for making money from movies include day-and-date availability, and making whole seasons of shows available at once as part of an OTT subscription.

“The subscription model clearly dominates in the US, which could create a disconnect in value propositions between consumers and content providers, who might seek out revenues from more lucrative transactional services over low-margin SVOD services. Currently they are exploiting multiple digital distribution outlets to monetize current and library TV content, including authenticated catch-up players, third-party aggregators, and direct-to-consumer subscription services. There are also bidding wars for premium library TV content, with Netflix paying a reported US$118 million for Friends and Hulu paying a reported US$160 million for Seinfeld,” said Hower.