SVOD won't wipe out subscription TV or free-to-air, says Ovum

Research firm Ovum reports that subscriptions to streaming video on demand services will have grown by a factor of 17 between the end of 2014 and the end of 2019. The forecasts show that SVOD subscriptions will rise from only 270,000 in December 2014 to hit 4.707 million by the end of 2019.

“SVOD services have been growing rapidly in Australia since the entry of Netflix in May this year," said David Kennedy, Research Director at Ovum.  “This has sparked strong competition from the Australian incumbents - the free-to-air and pay TV industries - that is driving takeup.”

Prior to the launch of Netflix in the Australian market, it was reported that there were up to 200,000 Australians already subscribing to it through location-blocking services. Foxtel's Presto launched in 2014, with Stan launching in January this year.

Despite the takeup of SVOD services, Ovum does not expect cannibalisation of the existing pay TV or free-to-air subscriptions, though there will be pressure on profitability as competition for content pushes up the cost of licensing.

“SVOD, pay TV and free-to-air are distinct consumer propositions that meet different needs. We expect SVOD to grow fast, but we also expect pay TV to maintain its dominance of sport and for free-to-air to remain popular because, well, it’s free,” Kennedy concludes. “Consumers will mix and match these different services."

Source: Ovum. All figures are end of calendar year. All Foxtel on T-Box and Telstra TV, and some Fetch TV subscriptions, are included in SVOD. FTA households are households where FTA remains the main source of TV.