Netflix, Amazon Driving Western European OTT

According to Digital TV Research, Netflix (NASDAQ:NFLX) will remain the dominant force in western European OTT subscription VOD (SVOD) ...

Netflix forecast to hit 201 million subs by 2023
Netflix forecast to hit 201 million subs by 2023

According to Digital TV Research, Netflix (NASDAQ:NFLX) will remain the dominant force in western European OTT subscription VOD (SVOD) for the next five years. However, Amazon (NASDAQ:AMZN) Video is expected to provide a stiff challenge as the research house estimates that 15 western European countries will offer Amazon Prime Video by end-2017.

Netflix's share of western European SVOD subscribers is expected to fall from 51% in 2015 to 47% by 2021. Amazon's share is expected to grow from 14% in 2015 to 21% by 2021. Thus, the two companies are expected to control two-thirds of the region's SVOD subs.

Digital TV Research expects 55.17 million paying SVOD subscribers across 17 countries in the region by 2021, up from 24.17 million in 2015 and an expected 32.87 million by end-2016. More than 8 million subscribers are forecast to be added in 2016 alone.

Simon Murray, principal analyst at Digital TV Research, said: "The UK will remain market leader, but Germany will close the gap. The UK accounted for a third of SVOD subscribers in 2015, but this proportion will fall to a quarter by 2021. SVOD growth will be more modest in France, Italy and Spain. In fact, the Netherlands and Sweden will have more SVOD subs than Spain in 2021, despite having much smaller populations."

About 31.5% of the region's TV households are expected to subscribe to a SVOD platform by 2021, up from 14.1% recorded by end-2015. Penetration is expected to remain notably higher in the Nordic countries and the UK. However, four of the five largest countries (France, Germany, Italy and Spain) are expected to be below the western European average. Spain is expected to have only 14.0% penetration by 2021.

Western European SVOD revenues are expected to total $5.87 billion by 2021, up from $2.15 billion in 2015. The UK (up by $800 million between 2015 and 2021 to $1,534 million) is expected to remain the SVOD revenue leader, generating more than Germany and France combined in 2021, even though German and French revenues are expected to more than triple over the same period.

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