The international marketplace for IP audio-video
facilitated through paid-to-own media vendors and pay-as-you-go subscription
services is on solid financial ground, and firmly integrated into the consumer
experience. These emerging businesses framea 12-year CAGR of 61.2%, with 2015
receipts projected at$22.6 billion, split between multiple musicplans, movies,
television and sports programming.
This globally distributed marketplace is presently
forecast to reach $31.7 billion in transaction value by year-end 2018. Over the
past twelve years, IP music (i.e. download-to-ownstores, subscription song-play
and internet music radio services) has captured the vast majority of
marketplace revenues. As recent as 2008,these stores, vendors and services owned
82.3% of the market (including iTunes), in contrast to movies/TV (including
NetFlix, Hulu) at 11.3%
Today, comparable figures are 48.9% movies/TV and
49.4% music, with sports programming capturing the remainder. Movies/TV
receipts are on track to surpass all modes of IP music payments in 2016, and
increase total share of revenues through 2018, according to the industry trade
resource IP Audio-Video Stores, Paid Channels and Subscription Services 2015 –
2018 produced by Publisher. IP music
subscription services (including Spotify, Pandora, RDIO, Rhapsody, new entrant
Apple Music, plus the internet subscriber tier offered by SiriusXM) are
forecast to deliver $2.6 billion in revenue across all served geographies.
Download-to-own stores (including iTunes and Amazon) are estimated to post $8.5
billion in global sales.
By contrast, IP video services are a majority
subscription or rentals-centric business, with approximately 18% of total
revenue generated through store sales.
This investment grade resource provides annual data and analysis of
music track downloads by vendor (2003 – 2015), movie/TV purchases and
transactions, subscribers by service and program category, global revenues,
growth projections, technology relationships, viewing hours, listening hours
and more. Across all stores, vendors and services, library scalematters. To
claim a stake in the IP audio-video marketplace,it’svitalto possess the cash
reserves necessary to pony up for digital rights, and or cover royalty payments
owed to organizations and guilds.
This marketplace is dominated by large consumer
brands, from internet pure-plays to highly integrated
cross-platformorganizations, including Netflix, Hulu, the broadcast networks,
studios and programmers, Amazon, Pandora, the major professional sports
leagues, Apple (i.e. iTunes Video), Microsoft, Wal-Mart and Sony.
Subscriber satisfaction, at this point in the
market’s evolution, is less likely to be tied to improved resolution (i.e.
higher bit ratesemployed as a marketing tactic, offering very highest quality
experience as a compelling point of differentiation) but rather library size,
aggressive/flat rate pricing and content accessibility (i.e. better navigation
and search) across a broad set of devices; consumers want choice. The growth in movie/TV libraries migrating
online continues, but at a moderateratecompared to the growth of subscribers
and viewing hours per subscriber to better manage media processing, storage and
licensing costs.
However, that strategy creates a dynamic which we
believe translates into slower market expansion over the next several years
(and reflected in our forecasts), even considering a ramp-up of in-house
productions such as House of Cards. For
example, NetFlix had 61 million paid/non-paid subs at year-end December 2014;
that figure is presently 65 million, with a projected total of 67 - 69+ million
by year-end 2015 (44- 46 million in the U.S.), an annual increase of 12% - 15%
NetFlix generated 1 billion hours of viewing per month, on average, in 2013,
against 33 million online subscribers, or 30.3 hours of monthly viewing.
NetFlix generated 3.3 billion hours of viewing per
month, on average, against 64 million subscribers so far in 2015, or 51.56
hours of viewing, a 15-month change of 69%. However, while NetFlix has
negotiated rights to an estimated 30,000 titles, the service only makes
available about 10,000 – 11,000 selections at any given time, with titles added
or removed as licensing windows open or expire.
Music services, with the notable exception of Pandora (with about 1
million tracks available), maintain libraries of 30 million or more
tracks.
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