What about pricing of SVOD services?
5 June 2019
Netflix has announced a price hike in the UK – up to +20 percent. Prior to this, the service also raised its prices in the US in January (roughly the same level). A growing content spend, driven by increased competition over consumers, is said to be the main reason. Interestingly, this move pushed the share price of the company, up from $349 last Wednesday to $353 yesterday (Tuesday May 4).
The global streaming market value is estimated to reach $125bn by 2025 (Wired); driven by a few actors with very deep pockets, heavily spurring the competition. And the Nordic region is definitely in the forefront of this battle. SVOD market penetration has surpassed 50% in all Nordic countries and stacking is reaching new heights, also in a global comparison. Strong local players, such as Viaplay, C More, TV2 Play (Denmark) and Sumo (Norway) are pushing both awareness, ARPU and consumer behavior.
The appetite for paid streaming services among Nordic households, is also proven in the strong growth; +800 000 subscribing SVOD households year-on-year. Even though it could be expected that the penetration rate eventually will slow down, Mediavision estimates that the number of subscriptions per household will continue to increase going forward. The Nordic average is currently 1.7 SVOD services per subscribing household. Add to this that telcos and distributors also will bundle streaming services – and we can foresee a continuous strong market development.
In this, pricing is obviously key. Disney has communicated a substantially lower price level (half) than Netflix, likely as a competitive tool. To any consumer, pricing is an important factor when allocating media spend. Today, the average Nordic household spends approx. €35 on pay TV (traditional + OTT). Netflix is obviously trying to get a bigger piece of the pie.
Who will win the Nordic streaming war?
Competition on the Nordic streaming market is ramping up with several new services about to launch. Content investments are escalating and only partly offset by price increases. In the US, Netflix recently announced +13-18% on subscription fees.
Mediavision press releases:
10 million streaming subscriptions in the Nordics
Streaming video continues to grow rapidly in the Nordics, Mediavision concludes in its recently published analysis on the Nordic TV and video market. An increasing number of consumers subscribe […].
Mediavision in the news:
- IAB Sveriges seminarium Online Video: June, 19, Stockholm, Sweden
*Events where Mediavision will be presenting