Bumper growth year ahead for video streaming

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 03 Feb 2023

Despite fierce competition and a cost-of-living crisis, subscriptions to video-on-demand (VOD) services won’t be subdued in 2023.

This is according to technology research and advisory group Omdia, which says 2023 is on track to be a good year for subscription VOD (SVOD) platforms.

Omdia predicts global online VOD subscriptions will reach 1.7 billion in 2023.

“Moving on from the impact of COVID, the introduction of the ad-tiers and an abundance of new content have meant 2023 will be an important year for growth in SVOD and its subscribers,” says Maria Rua Aguete, senior director in Omdia’s media and entertainment practice.

“2020 was a boom year for online video streaming, due to the pandemic and subsequent outdoor limitations, which resulted in more than 300 million new global subscription online video services.

“SVOD has grown at one of the fastest rates on record. In fact, in absolute terms, 2020 added more subscribers to the video-on-demand industry than at any other point in history and most likely, at any point to come.”

The research firm notes that even though 2020 was a year for the records, 2023 will still be a year of growth, and SVOD players will add 143 million new subscriptions, representing 50% of what was achieved in 2020.

Even countries like the US, where subscription video services have reached maturity, Omdia expects almost 40 million new SVOD subscriptions.

“The biggest battle services will face is the continuing rise in prices, which may scare customers and could slow down growth,” states Rua Aguete.

“Thanks to the introduction of advertising tiers, SVOD players like Netflix could still grow in already saturated subscription markets such as the US, but also acquire subscribers in Latin America or APAC, where price was considered a reason not to subscribe.”

The online video streaming market has undergone exponential growth in recent years, with platforms such as Netflix, Amazon Prime Video, Disney+ and Apple TV+ expanding their services to emerging markets like South Africa.

Industry commentators have noted SA is viewed as a gateway for many global entities when it comes to investments in Africa and business opportunities.

In addition, the country presents a strong case for VOD services as internet access increases and consumers become more digital-savvy.

As a result, many of the international SVOD players have made their services available locally, in hopes of attracting a new customer base.

Some of the players available in SA include Netflix, Disney+, Prime Video from Amazon, Hong Kong-based Viu, and Apple TV+ and BritBox, to name a few. They compete with local players like Showmax, Video Play from Vodacom and eMedia Investments’ eVOD.

Last year, PwC’s Africa Entertainment and Media Outlook 2022-2026 report found SA’s growing internet consumption was leading to a rapid rise in subscriptions to VOD services, with revenue growth to 2026 expected to outpace TV subscription revenue.

According to the report, SA’s entertainment and media market exceeded pre-COVID levels (2019) in 2021, with a total industry spend of R163 billion, indicating a 15.4% annual growth rate.

Segments such as video games and over-the-top (OTT) streaming services rose to new heights after thriving under lockdown conditions, while other sectors proved to be largely ‘pandemic-proof’, based on the report.

“There has been a huge shift over the past year and COVID-19 has catapulted internet access, and lot of South Africans are now online. Mobile internet penetration is forecast to be at 78% of the population.

“OTT video streaming is seeing a lot of growth influenced by mobile internet penetration, where people are mainly using their devices to consume content. Some formerly niche sectors, such as gaming, will barrel their way into prominence, as other formerly dominant sectors − such as traditional TV, newspapers and consumer magazines − are at risk of seeing their positions erode.”