Subscription television and online video services like Netflix and Hulu are growing in popularity within the consumer market and are digging into recurring revenue generated by traditional pay-TV offerings.
According to a study by Infonetics Research, the global pay-TV market totaled approximately $261 billion in revenue in 2011 and is forecast to continue growing through 2016, eventually producing $371 billion in profits. Cable, however, is struggling.
“Cable video still makes up over half of the global pay-TV market but revenue growth is decelerating due to a slowdown in new subscribers, especially in the lucrative North American market, as competition from satellite and IPTV operators intensifies and as OTT offerings from Netflix, Hulu and others siphon away a small but growing number of households,” Infonetics Research analyst Jeff Heynen said.
A separate study by Parks Association revealed the low subscription cost and viewing flexibility of Netflix is an advantage over traditional TV services, resulting in higher satisfaction rates. This suggests that more media companies will likely leverage subscription commerce models for video offerings.