Recently, Deloitte Global released its 2018 Predictions report, which considers what trends may transform and disrupt media, entertainment, technology and telecommunications in 2018 and beyond. This year’s report contains 11 separate Predictions, many relevant to companies in the media and entertainment ecosystem.
In one Prediction, Deloitte Global asserts that by the end of 2018, 50 percent of adults in developed countries will have at least two online-only media subscriptions, and by the end of 2020, that average will have doubled to four. In total, Deloitte Global estimates there will be 680 million subscriptions and about 350 million subscribers this year.
The report further predicts that a fifth of adults in developed countries will pay for or have access to at least five paid-for online media subscriptions, and by the end of 2020, they will have 10. For these adults, aggregate spend on digital subscriptions they have access to (paid for by themselves or by someone in the household) is likely to average over $100 per month by 2020, or over $1,200 annually.
Here’s a quick overview of how different categories of digital subscriptions may grow.
Online TV and movie services
At the start of 2018, we expect there will be about 375 million subscription video-on-demand (SVOD) subscriptions worldwide. The number of SVOD services a household may have access to is likely to increase through the end of the decade as more production houses and content owners launch over-the-top (OTT) services. By the end of 2020, we expect that in mature SVOD markets such as the US, an individual may subscribe or have access to multiple TV services spanning many genres, including drama, comedy, sports and kids.
In non-English-speaking markets, we expect more local language content to be created to drive demand for OTT services. As more local language content is developed, SVOD services will broaden their appeal; fluency in English or a willingness to consume dubbed or subtitled content will no longer be necessary.
By the end of 2018, we expect there will be about 20 million digital-only news subscriptions worldwide. We expect news providers to focus increasingly on generating revenue from subscriptions, typically as a complement to advertising, given the challenges they have encountered during years of reliance on ad revenue alone. Whereas certain titles had a 10:90 ratio of subscription to ad revenue in 2012, we predict it may be 50:50 by 2020.
By the end of 2018, we expect there will be about 150+ million music subscriptions. Subscriptions for music services are about $10 per month in the US, €10 in Europe and £10 in the UK – about the price of a CD. In 2015, the average per-stream rate for online music videos worldwide was $0.001, half as much as in the previous year. $10 is equivalent, in revenue terms, to the royalties for 1,000 streams.
Growth should continue to increase for years to come – the number of subscribers is still a fraction of the number of ad-funded consumers, and any smartphone can be a repository of or a conduit to music services.
At the start of 2018, we expect there will be about 35 million subscribers to video game networks that enable online play. The number of subscribers may appear quite small, but it is worth bearing in mind that the number of latest-generation consoles is likely to remain under 100 million at the end of 2018, so 35 percent penetration is quite respectable. Furthermore, at $5 per month, 35 million subscribers are worth an additional $2.1 billion in annual and predictable revenue on top of the money made by selling the games and consoles in the first place.
Growth in the number of online subscriptions is likely to be driven by an increased emphasis on online multiplayer, rather than individual, games.
The total number of online media subscriptions, as well as the average number of subscriptions per individual and household, should grow by at least 20 percent in 2018 and continue to increase in the medium term. This is a positive development for the media industry.
It is also the case that the media industry cannot rely on online subscriptions alone; the sector should also remain focused on advertising – but with ad formats and an ad load appropriate to its customer base.
Finally, the media industry should also consider how best to sell content on an individual article, track or edition basis, and other revenue models, including tips and contributions, should also be considered.
Mark has been with Deloitte for 32 years and has worked out of our Dublin, London and Johannesburg Offices. He has been a partner for 20 years. He has worked across most of the firm’s service areas – assurance, risk advisory, corporate finance and consulting. His clients are predominantly multi-national and he has developed a strong network across DTT in all major geographies which enables fast access to the right resources. He also served on the South African Board of Directors from 2000 to 2004. He acts as lead client services partner or advisory partner to a number of large, strategic clients of the firm in both the media and telecommunications sectors. Mark also leads the firm’s Technology, Media and Telecommunications industry for Africa and is a member of the global TMT executive, with a responsibility for learning. In October 2015, Mark took over the leadership of the global media sector with an emphasis on using his global network to support our global media clients’ ambitions to internationalise their businesses. Areas of Focus Mark specialises in the provision of strategic, operational and technology enabled solutions to many sectors of the digital, multi-platform media industry, ranging from TV broadcasters to digital businesses such as internet, interactive TV and mobile content companies. He remains active in the M&A domain for internet media companies and in the transformative changes for newly acquired businesses and their back-office evolution. Much of Mark’s time is spent helping companies to internationalise their businesses, dealing with market entry and expansion considerations and identifying partnership opportunities to accelerate their growth.