Spending on Consumer Video Media Services to Reach $314 Billion in 2017

Global spending on consumer video media services will total $314 billion in 2017, a 4.2 percent increase from 2016, according to Gartner. Pay-TV services is the largest spending segment and is on pace to represent 90 percent of the total market, totaling $282 billion in 2017.

In 2017, emerging Asia/Pacific (20.8 percent) and Middle East and North Africa (17.4 percent) are forecast to record the highest growth in end-user spending on consumer video media services. Earlier this year, China Mobile began offering its pay-TV service free of charge to its premium subscribers for the first two years of a new contract.

"This will lead to an influx of new subscribers in the pay-TV marketplace. However, it will also bolster price competitiveness and put negative pressures on the average revenue per user (ARPU) of the overall pay-TV market," said Fernando Elizalde, principal research analyst at Gartner.

Moreover, internet-delivered linear TV services have already launched in India and the Middle East, and Gartner expects these services will commence across all emerging regions by 2018. "We estimate that, incentivized by lower prices, one million households in emerging regions will enter the pay-TV market through an internet TV service by 2020," said Elizalde.

End-User Spending on Consumer Video Media Services (Billions of U.S. Dollars)

Transactional video on demand (T-VOD) offers consumers the ability to access a wide variety of content, from either managed pay-TV providers or over-the-top (OTT) companies such as Amazon, Google or Apple. "OTT-VOD sources are changing the landscape," said Derek O'Donnell, senior research analyst at Gartner. "OTT-VOD services are the fastest-growing segment in the VOD landscape and eroding pay-TV providers' share of revenue. OTT-VOD sources began outperforming traditional pay-TV sources in 2016.

He added that the availability of premium-priced 4K content will increase end-user spending on T-VOD content in mature regions, from $160 million in 2017 to $400 million by 2020. In emerging regions, increased competition in the T-VOD marketplace from unmanaged providers and increased threats of piracy will put negative pressure on T-VOD prices. End-user spending on T-VOD services in emerging markets will decrease gradually each year, starting in 2017, by about $60 million to almost $445 million by 2020.

Global consumer spending on subscription-based video on demand (S-VOD) services will total $18.7 billion in 2017, an increase of 28 percent from 2016. The average consumer adoption of S-VOD services is 10 percent in 2017, with an average ARPU of $7.41. The highest ARPUs are in Japan ($12.10), Mature Asia Pacific ($10.84) and North America ($9.60).