Video-on-Demand
Summary
Includes the latest industry forecasts for the video-on-demand market as well as current marketplace dynamics.
Downloads
Contents
- Video-on-Demand
- Current Market
- VoD Forecasts
- Video-on-Demand: ‘Must Have’ Vision of the Future
Video-on-Demand
Video on Demand
• By 2012, 909 million global homes will have access to true video-on-demand services, equating to 78% of the world’s TV homes (Informa Telecoms & Media).
• In the US, MAGNA Global anticipates a rise in the number of VoD-enabled TV households to 53 million by the end of 2010.
• Within Europe, the UK is the leading country for VoD services and is predicted to generate revenues of $677 million by 2012.
• Virgin Media’s VoD service remains the UK’s market leader, with usage rising to 55% of its digital customers (Q2 2009).
Highlights
Video on Demand
Video-on-Demand (VoD)
Video-on-demand systems allow users to select and watch video and clip content over a network as part of an interactive television system. VoD systems either “stream” content, allowing viewing in real time, or “download” it in which the program is brought in its entirety to a set-top box before viewing starts. The majority of VoD systems allow users to buy or select a film or television programme which then begins to play on the television set almost instantaneously.
Established methods of delivery, such as pay-per-view for sports and near-video-on-demand for staggered movie screenings via digital cable and DTH, will continue to dominate the on-demand sector over the next few years. Thereafter, true VoD, whereby subscribers can purchase programmes when they want, will come more to the fore.
According to Ovum, VoD is not a revenue generator at the moment but a ‘must have’ vision for the future in terms of both cash flow and telcos’ content business.
Current Market
Video-on-demand remains a relatively small market within the UK, currently led by Virgin Media’s VoD service. Usage of Virgin’s service has risen to more than 55% of its digital customers, which equates to 1.9 million users on a monthly basis (Q2 2009). By Q2 2009, Virgin’s VoD service was being enjoyed by more of its customers more frequently, with 62 million views each month on average. Average views per user, per month, in Q2 2009 rose to 32.1 (compared to 23.8 views for Q2 2008).
Last year the cable company tied content from the BBC’s iPlayer into the broadband service and in February 2009 it added ITV programming, with shows such as Coronation Street, Emmerdale and The Jeremy Kyle Show attracting millions of views.
“Video-on-demand is becoming the application to use,” said Virgin’s chief executive Neil Berkett in an interview with MediaGuardian.co.uk. “The number of avid users is just growing and growing and we are now concentrating on getting even greater reach.”
Virgin Media is planning to change its electronic programming guide so that catch-up TV content is as easy to find as linear television channels. The company has also been testing tying adverts around VoD content, offering another potential money-spinner.
In September, Five announced plans to team up with Sony to broadcast its flagship shows on a new video-on-demand service that is soon to be made available via Bravia television sets.
In addition, Sony is set to launch a new video-on-demand service on its PlayStation network in a bid to compete with Microsoft’s Xbox 360 service. The PlayStation Network Video Store will enable users in the UK, France, Germany and Spain to rent or buy films such as Star Trek, Bruno and The Dark Knight from November onwards. Sony, which will launch the service on the PlayStation3 and PlayStation Portable, has agreed deals with film studios including Warner Bros, MGM, Sony Pictures Entertainment and Twentieth Century Fox. Users will be able to watch a rented film up to 14 days after it has been downloaded and will have the option to transfer films onto Sony’s PSP handheld device.
Video on Demand
VoD Forecasts
A report from Informa Telecoms & Media forecasts that by 2012, 909 million homes will have access to true video-on-demand (VoD) or near-video-on-demand (NVoD) technology, representing 78% of the world’s TV homes and generating revenues in excess of US$10 billion.
The report goes on to project that North America and Europe will account for a combined 83% of global on-demand revenues by 2012, with North America out front holding a share of close to 50%. Last year, North America accounted for 56% of global VoD revenues but just 25% of worldwide VoD/NVoD users. The report forecasts that the Asia Pacific region will account for over half of on-demand homes by 2012 but take under 12% of global revenues.
On-demand revenue for Europe is predicted to rise to $3,305 million in 2012, whilst North America jumps to $5,047 million in three years. Within Europe, the UK is the leading country for on-demand and is predicted to generate $677 million in 2012, with France and Germany some way behind in second and third place. Informa adds that operators are continuing to demonstrate the importance of on-demand services by the fact that they are making ongoing investments in expensive upgrades to their networks in preparation for widespread on-demand activity.
“While true VoD operators still use a free-content model to promote high customer awareness of the technology, there are now signs that these services are successfully converting users into revenue-generators,” said Adam
Global Household and Revenue Forecasts by Region
Thomas, author of the report. “This is often at the expense of NVoD services, which are either being phased out, or reduced in size.”
Over in the US, MAGNA Global Research estimates almost 41.7 million US TV households were VoD-enabled by the end of 2008, anticipated to rise to 53 million in 2010 (see Table 2). More than half of all US TV homes will have VoD in 2012, equating to 62.2 million homes.
Video-on-Demand: ‘Must Have’ Vision Of The Future
Ovum has predicted that video-on-demand (VoD) revenues will reach $12.7 billion worldwide in 2011, making it one of the fastest-growing digital content services over the forecast period. Ovum expects to see more telcos across the globe launching their on-demand content propositions, moving themselves into content distribution.
Aleksandra Bosnjak, content and media analyst at Ovum, said: “VoD is not a revenue generator at the moment but a ‘must have’ vision of the future in terms of both cash flow and telcos’ content business survival.
“From a content provider’s perspective, telcos and ISPs will be the new contributors to content distribution and film finance, especially over the long term as the service improves and reaches a more significant scale and enhances its on-demand functionalities.”
Bosnjak added: “We argue that over the next five years, 50% of telcos’ costs will come from content acquisition and marketing-related activities.
“In their quest for an innovative content strategy, some telcos will experiment with various forms of content finance, such as financial backing via minimum guarantees, or go even deeper into the actual co-productions or co-ventures. In fact, we predicted this move back in February 2006 when we ran into telcos at the Berlin Film Festival. And we already see it happening with France Telecom and a baby IPTV operator Croatia Telekom Max TV service, which is producing its own short-format shows, and by using its own in-house production talent and facilities.”
Ovum’s view is that a careful content strategy and locally adapted VoD proposition will be a major driver of telco VoD service revenues, now estimated to comprise one third of the whole VoD revenue pie, depending on the country.
Bosnjak finished by saying: “”Understanding the cash flow of traditional content distribution and collaboration with local content players will be the best approach for many operators in this tough VoD race – because the future of TV content, and especially European content distribution, is based on an on-demand business model.”
Video on Demand
Video on Demand
• By 2012, 909 million global homes will have access to true video-on-demand services, equating to 78% of the world’s TV homes (Informa Telecoms & Media).
• In the US, MAGNA Global anticipates a rise in the number of VoD-enabled TV households to 53 million by the end of 2010.
• Within Europe, the UK is the leading country for VoD services and is predicted to generate revenues of $677 million by 2012.
• Virgin Media’s VoD service remains the UK’s market leader, with usage rising to 55% of its digital customers (Q2 2009).
Highlights
Video on Demand
Video-on-Demand (VoD)
Video-on-demand systems allow users to select and watch video and clip content over a network as part of an interactive television system. VoD systems either “stream” content, allowing viewing in real time, or “download” it in which the program is brought in its entirety to a set-top box before viewing starts. The majority of VoD systems allow users to buy or select a film or television programme which then begins to play on the television set almost instantaneously.
Established methods of delivery, such as pay-per-view for sports and near-video-on-demand for staggered movie screenings via digital cable and DTH, will continue to dominate the on-demand sector over the next few years. Thereafter, true VoD, whereby subscribers can purchase programmes when they want, will come more to the fore.
According to Ovum, VoD is not a revenue generator at the moment but a ‘must have’ vision for the future in terms of both cash flow and telcos’ content business.
Current Market
Video-on-demand remains a relatively small market within the UK, currently led by Virgin Media’s VoD service. Usage of Virgin’s service has risen to more than 55% of its digital customers, which equates to 1.9 million users on a monthly basis (Q2 2009). By Q2 2009, Virgin’s VoD service was being enjoyed by more of its customers more frequently, with 62 million views each month on average. Average views per user, per month, in Q2 2009 rose to 32.1 (compared to 23.8 views for Q2 2008).
Last year the cable company tied content from the BBC’s iPlayer into the broadband service and in February 2009 it added ITV programming, with shows such as Coronation Street, Emmerdale and The Jeremy Kyle Show attracting millions of views.
“Video-on-demand is becoming the application to use,” said Virgin’s chief executive Neil Berkett in an interview with MediaGuardian.co.uk. “The number of avid users is just growing and growing and we are now concentrating on getting even greater reach.”
Virgin Media is planning to change its electronic programming guide so that catch-up TV content is as easy to find as linear television channels. The company has also been testing tying adverts around VoD content, offering another potential money-spinner.
In September, Five announced plans to team up with Sony to broadcast its flagship shows on a new video-on-demand service that is soon to be made available via Bravia television sets.
In addition, Sony is set to launch a new video-on-demand service on its PlayStation network in a bid to compete with Microsoft’s Xbox 360 service. The PlayStation Network Video Store will enable users in the UK, France, Germany and Spain to rent or buy films such as Star Trek, Bruno and The Dark Knight from November onwards. Sony, which will launch the service on the PlayStation3 and PlayStation Portable, has agreed deals with film studios including Warner Bros, MGM, Sony Pictures Entertainment and Twentieth Century Fox. Users will be able to watch a rented film up to 14 days after it has been downloaded and will have the option to transfer films onto Sony’s PSP handheld device.
Video on Demand
VoD Forecasts
A report from Informa Telecoms & Media forecasts that by 2012, 909 million homes will have access to true video-on-demand (VoD) or near-video-on-demand (NVoD) technology, representing 78% of the world’s TV homes and generating revenues in excess of US$10 billion.
The report goes on to project that North America and Europe will account for a combined 83% of global on-demand revenues by 2012, with North America out front holding a share of close to 50%. Last year, North America accounted for 56% of global VoD revenues but just 25% of worldwide VoD/NVoD users. The report forecasts that the Asia Pacific region will account for over half of on-demand homes by 2012 but take under 12% of global revenues.
On-demand revenue for Europe is predicted to rise to $3,305 million in 2012, whilst North America jumps to $5,047 million in three years. Within Europe, the UK is the leading country for on-demand and is predicted to generate $677 million in 2012, with France and Germany some way behind in second and third place. Informa adds that operators are continuing to demonstrate the importance of on-demand services by the fact that they are making ongoing investments in expensive upgrades to their networks in preparation for widespread on-demand activity.
“While true VoD operators still use a free-content model to promote high customer awareness of the technology, there are now signs that these services are successfully converting users into revenue-generators,” said Adam
Global Household and Revenue Forecasts by Region
Thomas, author of the report. “This is often at the expense of NVoD services, which are either being phased out, or reduced in size.”
Over in the US, MAGNA Global Research estimates almost 41.7 million US TV households were VoD-enabled by the end of 2008, anticipated to rise to 53 million in 2010 (see Table 2). More than half of all US TV homes will have VoD in 2012, equating to 62.2 million homes.
Video-on-Demand: ‘Must Have’ Vision Of The Future
Ovum has predicted that video-on-demand (VoD) revenues will reach $12.7 billion worldwide in 2011, making it one of the fastest-growing digital content services over the forecast period. Ovum expects to see more telcos across the globe launching their on-demand content propositions, moving themselves into content distribution.
Aleksandra Bosnjak, content and media analyst at Ovum, said: “VoD is not a revenue generator at the moment but a ‘must have’ vision of the future in terms of both cash flow and telcos’ content business survival.
“From a content provider’s perspective, telcos and ISPs will be the new contributors to content distribution and film finance, especially over the long term as the service improves and reaches a more significant scale and enhances its on-demand functionalities.”
Bosnjak added: “We argue that over the next five years, 50% of telcos’ costs will come from content acquisition and marketing-related activities.
“In their quest for an innovative content strategy, some telcos will experiment with various forms of content finance, such as financial backing via minimum guarantees, or go even deeper into the actual co-productions or co-ventures. In fact, we predicted this move back in February 2006 when we ran into telcos at the Berlin Film Festival. And we already see it happening with France Telecom and a baby IPTV operator Croatia Telekom Max TV service, which is producing its own short-format shows, and by using its own in-house production talent and facilities.”
Ovum’s view is that a careful content strategy and locally adapted VoD proposition will be a major driver of telco VoD service revenues, now estimated to comprise one third of the whole VoD revenue pie, depending on the country.
Bosnjak finished by saying: “”Understanding the cash flow of traditional content distribution and collaboration with local content players will be the best approach for many operators in this tough VoD race – because the future of TV content, and especially European content distribution, is based on an on-demand business model.”
Video on Demand
Featured Tables
- Global Household and Revenue Forecasts by Region
- US VoD Forecasts
7 pages, featuring 2 tables