22225 - SCTE Broadband - Aug2024

TECHNICAL

Equilibrium in video-on-demand services The COVID-19 pandemic accelerated growth in OTT: many households in lockdown increased their video consumption habits and elected to purchase additional subscriptions from the leading streaming service providers. This year, in 2023, subscriptions have effectively reached equilibrium in most countries, with each household typically maintaining an average of 2.3 SVoD subscription services; this represents a marginal increase from 2.1 services throughout the previous year. Consumer surveys confirm that households are now satisfied with the number and type of SVoD services they have access to. Consequently, there has been a sharp reduction in the intention to unsubscribe, suggesting that the major market correction has already occurred, with audiences becoming more stable in the services they take because of an increased confidence in cost of living and available disposable income. Some of the largest declines have come from Apple TV+ and Paramount+, however, these two services also experience the highest churn among top global subscription services. On the opposite end of the scale, Netflix maintains the most loyal subscriber base, with average likelihood to cancel at just 6%, whilst close behind is Amazon Prime at 7%. UHD overtakes HD for SVoD Although not exclusive to HEVC, usage of the codec is closely associated with the delivery of 4K HDR streaming video services, given the lower storage requirements and bandwidth efficiency gains at the same visual quality. Intrinsic support for 10-bit colour profiles is a necessity to present HDR content; this is a central feature of the HEVC standard and one of the primary incentives for an increase in deployment. While all SVoD services have the capacity to stream 4K content through to audiences, the amount of content available varies greatly. Netflix maintains the largest volume of 4K content offered to their Premium subscribers, with over half of this being episodic, a split also matched by Apple TV+. Contrast this with Amazon Prime, where the majority of its 4K content is presented as feature length movies.

Worldwide Active SVoD Subscriptions: UHD and HD Source: Futuresource Consulting

Active UHD SVoD Subscriptions by Region, 2023 (m) (% share) Source: Futuresource Consulting

Netflix is the leading service providing 4K content, having presented a 15% increase in available content since November 2022. Futuresource’s Living with Digital survey across seven countries shows that, on average, 25% of Netflix subscribers were on the highest available tier. The premium tier isn’t just about the ability to stream 4K UHD services; it also allows users to experience content encoded with spatial audio. This tier further enables concurrent viewing across up to four devices in addition to downloading content to a maximum of six supported devices.

Percentage of Netflix subscribers on Premium (4K UHD) Tier Source: Futuresource Consulting, Living With Digital Consumer Survey

SEPTEMBER 2024 Volume 46 No.3

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