Online video is becoming a significant part of the financing of the audiovisual sector in Europe. According to Ampere Analysis, it accounts for 30 % of total revenues.
Online video (video-on-demand, VOD) is now the main element driving the European media economy. The size of the European audiovisual market is estimated at €142 billion this year, almost a third more than five years ago. This was stated at the AKTV conference in Prague in November by Richard Broughton of the analytical company Ampere Analysis, who presented a report on the shape of the European VOD landscape to the audience.
But over the past 15 years, the sources of revenue flowing into the audiovisual sector have been changing. Whereas fifteen years ago the dominant sources were revenues from TV advertising sales and pay TV sales, this year, online video revenues (VOD and paid SVOD) are changing the overall structure, accounting for 30 % of total AV sector revenues. The majority (19 %) of this is still accounted for by revenues from online advertising sales, with subscription (SVOD) revenues accounting for more than a tenth.
The covid-19 pandemic has contributed greatly to the growth of paid online video (SVOD). It has accelerated the increase in the number of subscribers to streaming services. Last year, roughly 57 million subscribers were added in Europe (almost 50 % more than in 2019). This year, a lower increase in subscribers is expected - forecasts speak of 35 million subscribers.
Paid video-on-demand (or OTT) services have already reached one in two households in Western European countries. The estimate for Central and Eastern European countries is lower: less than a quarter of households. But behind most online subscription services are the offerings coming from the major American players. This accounts for around 70 % of all pre-paid online services, with local European players accounting for a smaller share (30 %).
Experience from the US market shows that in the long term, revenues from paid TV and from linear TV advertising are declining (although 2021 is an exceptional year in terms of TV advertising development and revenues are higher compared to both 2020 and 2019). In Europe, the situation is different: here, paid TV revenues have been increasing over the last ten years and TV advertising revenues have also been growing until 2019. These were slowed down last year by the covid-19 pandemic, but have returned to a growth trajectory this year.
Experience so far shows that Netflix's offerings in Europe tend to appeal to younger viewers than the population average. In Poland, for example, 35 % of viewers are aged 25-34 and 22 % of viewers are aged 35-44. This may indicate growth opportunities in these markets, particularly in the 45+ audience categories. At the same time, these groups may not only be looking for local content, although content localization is the next evolutionary phase in the VOD market. Major TV broadcasters are also responding to the development, looking to place 10-15 % of their output on VOD platforms first, the Ampere Analysis report also found.
Source: mediaguru.cz
