SVoD killed the pay TV star?

Subscription Video on Demand (SVoD) services have been around for over a decade in developed countries like the United States, but have only began making waves in Southeast Asia and the Middle East in 2015. Watching shows “on-demand” has become increasingly popular in emerging markets, especially in countries where piracy has previously reigned supreme.

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SVoD services like iflix are gaining strong momentum, taking over both TV screens and mobile devices by providing consumers:

1) Choice – with unlimited access to thousands of movies and TV shows (including fully subtitled local, regional, and international content);

2) Convenience – the ability to both stream and download on up to five devices, wherever, whenever;

3) Affordability – all for a monthly low fee that’s less than the price of a pirated DVD;

4) Freedom – from both long-term and legacy contracts.

While these all sound like great value propositions, the driving force behind the meteoric rise and success of SVoD is a fundamental shift in consumer expectations and behaviors. The Philippines is a prime example of where technology has disrupted a market. Internet penetration has reached 37 percent of the population, and Filipinos lead the world in internet consumption, averaging nine hours per day online.

People just can’t watch TV anymore

One widely acknowledged and looming threat to providers of scheduled programming (or linear TV) is “cord-cutting.” Cord-cutting occurs when subscribers cancel their pay TV subscriptions in preference of internet content services, including SVoD.

There is additionally another common and increasing phenomenon, which is a growing set of consumers, mostly digital natives, who are growing up exclusively watching shows online. These “cord-nevers” as they are referred to, are unlikely to ever subscribe to pay TV services at all.

Consumers are actively taking control of their entertainment experience, opting for uninterrupted viewing, with the freedom to choose the shows they want, whenever they want, on whatever device they want. In contrast, with the restrictions imposed by linear TV, the freedoms offered by these platforms have more and more users shifting their viewing habits, in favor of more internet-based content, which in turn creates both challenges and opportunities for content providers.

Entertainment revolution

The internet has transformed how we as consumers live our lives and continues to disrupt traditional industries—from the way we shop, how we move and travel, to how we consume books, music, and entertainment.

While there still exist organizations whose business models are, by default, built to withstand change—they are gradually acknowledging that they are no longer in the driver’s seat. Consumers are paving the way for disruptive innovation: Wikipedia disrupted traditional reference learning; Spotify disrupted the music industry; social networking apps like WhatsApp and Viber disrupted messaging; while Uber and Grab disrupted the taxi industry.

In the entertainment industry, on-demand services like iflix disrupted linear TV.

Today’s disruptive innovations offer consumers freedom from “boxed-in” ideas and routines.

Crazy vision for emerging markets

The increasing trend of consumers demanding premium content on their own terms has spearheaded the growth of SVoD services around the world. While developed markets previously led this shift in entertainment consumption, emerging markets are quickly catching up, creating their own demands and unique challenges. Instead of just streaming over an internet connection, services like iflix have also rolled out offline viewing for emerging markets where inconsistent infrastructure and slow internet connections are often prevalent, conditions which are infrequent in developed markets.

Currently, there are over 3.7 billion active internet users. That’s more than 50 percent of the entire world population. While the Americas and Europe have an internet penetrate on rate of over 70 percent, they only account for 23 percent of the population. Asia and Africa still consist of the majority of the population at over 76 percent. And that’s why we place a great deal of importance to these emerging markets. The growth potential is enormous, and while a gap still remains between the availability of video services and the consumer’s ability to access them—with Asia and the Middle East leading the charge—it will only be a matter of time until the tables will turn.

While the SVoD industry globally is still evolving, linear TV continues to be a popular choice for entertainment amongst consumers today, especially in the realm of sports and other time-sensitive viewing. It’s true that SVoD hasn’t killed Pay TV yet. But it has created a significant shift in how consumers experience entertainment, raising the bar to the benefit of consumers everywhere.