In response to the growing revenues of subscription-based services, traditional TV channels are increasing their direct-to-consumer (D2C) offerings as an emerging new service, according to new analysis from IHS.
The core concept of the channel is changing because of audience behavior, leading to broadcasters adapting to evolving viewer needs, says Ted Hall, research director of television at IHS. “The traditional linear channel will be around for a long time to come, but it will become increasingly marginalized by a plethora of online services, from catch-up TV to TV Everywhere, pay TV channels’ streaming offerings and YouTube multi-channel networks,” Hall says.
New platforms such as HBO Now, Discovery DPlay and DisneyLife are leading the way among traditional channels and employing a new strategy that not only gives more power in carriage-free negotiations, but also allows them to grow their revenues in online-subscriptions, Hall says.
Of course, the main influence on broadcasters turning to D2C launches is the continued popularity of Netflix. Hall says that Netflix outspent almost everyone on original and acquired content in 2013 and 2014, excluding sports. In fact, its content spend was about double that of ITV and Amazon. The forecast is that Netflix will surpass 100 million subscribers worldwide by 2018.
“Between now and 2019, we forecast [Netflix] subscriptions will grow by 22%, with 10 million new subscribers to be added in the U.S.,” says Dan Cryan, senior director media and content at IHS.
Moving forward, IHS expects international subscribers to be key for Netflix and the company will invest in more international content leading to huge growth in Western Europe over the next three years. IHS forecasts 10 million new subscribers will be added to its international base during these three years. Of that, the U.K. will be the top draw in Europe for Netflix with about 7.1 million paying subscribers by 2018, Hall says.
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