In 2017, Middle East and North Africa along with the Asia Pacific market are said to record the highest growth in end-user spending on consumer video media services, according to a recent insights report released by Gartner.

The report also states that the global spending on consumer video media services will total USD 314 billion in 2017, a 4.2 percent increase from 2016. Pay-TV services is the largest spending segment and is on pace to represent 90 percent of the total market, totaling USD 282 million in 2017.

Earlier this year, China Mobile began offering its pay-TV service free of charge to its premium subscribers for the first two years of a new contract. “This will lead to an influx of new subscribers in the pay-TV marketplace. However, it will also bolster price competitiveness and put negative pressures on the average revenue per user (ARPU) of the overall pay-TV market,” said Fernando Elizalde, principal research analyst at Gartner.

Moreover, internet-delivered linear TV services have already launched in India and the Middle East, and Gartner expects these services will commence across all emerging regions by 2018. “We estimate that, incentivized by lower prices, one million households in emerging regions will enter the pay-TV market through an internet TV service by 2020. The dramatic difference in the price of these packages compared with traditional pay-TV packages will also put downward pressure on ARPUs overall,” said Mr. Elizalde.

T-VOD Content Increase Consumer Spending
Transactional video on demand (T-VOD) offers consumers the ability to access a wide variety of content, from either managed pay-TV providers or over-the-top (OTT) companies such as Amazon, Google or Apple. “OTT-VOD sources are changing the landscape. OTT-VOD services are the fastest-growing segment in the VOD landscape and eroding pay-TV providers’ share of revenue. OTT-VOD sources began outperforming traditional pay-TV sources in 2016,” said Derek O’Donnell, senior research analyst at Gartner.

Global consumer spending on subscription-based video on demand (S-VOD) services will total USD 18.7 billion in 2017, an increase of 28 percent from 2016.

Universal search is the key to driving further penetration, which will allow consumers to search for content across all their S-VOD services. “However, this is a ‘holy grail’ in the industry as providers, such as Netflix and HBO don’t want to cooperate. Therefore, true universal search is still some years away,” added Mr. O’Donnell.

“Currently, there is a market for niche subscription video services and established streaming providers. However, as the market matures, we forecast more consolidation around the fewer companies that can innovate and set themselves apart from the juggernauts within the industry,” concluded Mr. O’Donnell.