Ampere Research analyzed 20 of the largest TV subscription markets around the world, including the US, UK, France, Germany, China, India, Japan, and Brazil, to determine the theoretical ceiling for SVOD stacking behavior. It estimates that this maximum ceiling for SVOD services per household is at eight, the highest in the US. In comparison, Europe is lowern at between two to five services per household.
Despite cord-cutting, the average US household has continued to spend an almost identical amount of $900 as they switch from individual high-cost cable and satellite contracts to multiple lower-price SVOD services. “Even as we begin to see growth in SVOD services in emerging markets, our analysis shows that opportunity for expansion is still a very solid proposition in established territories,” Daniel Gadher, Research Manager at Ampere Analysis, said. “As cord-cutting continues, the US stacking ceiling is theoretically as high as eight services per average household, while in developing markets like Brazil it is far lower at just 1.5."
Outside the US, some major markets are still seeing growth in household spending on TV. However, the underlying rate of change is relatively low. In these markets, Ampere expects growth in household outlays on entertainment to increase the ceiling for SVOD services by just 20%–30% over the next five years. “To make the most of this capacity, OTT players first need to demonstrate that they are a viable replacement for existing paid-for TV services,” Gadher said. “This process is ongoing in the US and Canada, but elsewhere in the world, pay-TV has remained resilient. But as US studio content increasingly moves to the online world, the opportunity for new players to take a share of consumer entertainment spending, even in already busy markets, improves."
In Ampere’s view, markets such as the UK and Germany have an average household capacity of roughly three services at current price points. However, this still translates into a sizeable number of subscriptions, 88 million in the UK, and 124 million in Germany. Similarly, in the USA, even four to five services per household would translate to a total of 510 -640 million possible subscriptions.
Even as we begin to see growth in SVOD services in emerging markets, our analysis shows that opportunity for expansion is still a very solid proposition in established territories. As cord-cutting continues, the US stacking ceiling is theoretically as high as eight services per average household, while in developing markets like Brazil it is far lower at just 1.5.” Daniel Gadher Research Manager, Ampere Analysis
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