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YouTube Red, the company’s subscription-based service that costs $10 per month, launched over a year ago and has seen slow subscriber growth, but it’s still early on. According to figures cited by The Verge, the service has added 1.5 million paying subscribers since its October 2015 launch, and another 1 million people are on free trials.
This pales in comparison to its ad-supported user base which attracts over 1 billion users, or almost one-third of all people on the Internet. Of the 88 countries with localized versions of YouTube, only four have access to YouTube Red: the US, Australia, New Zealand, and Mexico. Here are implications for YouTube creators and users in the upcoming year:
Revenues from YouTube Red are still relatively small. The Young Turks Network, which owns 30 YouTube channels, says that subscription-related revenue from YouTube represents less that 5% of total revenue, according to Digiday.
A three-pronged approach to attract non-subscribers. The value proposition can be grouped in three broad buckets: an ad free experience, original TV shows and movies, and music. Focusing on unique content could be the real driver for growth, as YouTube users have been tolerating ads for nearly a decade.
Heavy investments in original content. The company is doubling down on expensive, high-quality content. It is building production studios in YouTube offices worldwide, which the platform's top creators can tap into.
Getting consumers to pay for content that was previously free is no easy feat, and YouTube will likely have to refine and differentiate the service further to convert non-subscribers. One way to do this is to be more experimental with tiers, providing cheaper monthly plans. As consumers are increasingly subscribing to multiple streaming services, YouTube will have to create a highly compelling offering beyond ad-free.
Growth of subscription-video-on-demand (SVOD) services in the US has slowed considerably over the last year as competition in the online video streaming space intensifies. Heavy hitters like Netflix, Hulu, and Amazon Prime are increasingly squeezed by new competitors with exclusive content and niche video offerings.
International markets, and specifically, the Asia-Pacific (APAC) region will be paramount for both established SVOD players and new entrants looking to establish themselves in the successful video space.
The SVOD market in the APAC region is poised for explosive growth over the next five years due to increased mobile adoption, amplified broadband expansion, and enhanced purchasing power.
Dylan Mortensen, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on subscription video on-demand that explores how slowing SVOD growth in the US will lead to a surge in the APAC region.
Here are some of the key takeaways from the report:
While SVOD services are increasingly rooted among US households, growth is beginning slow. Growth in North American SVOD subscriptions is set to fall from 30% in 2014 to 4% by 2018.
The best opportunity for continued growth lies in the Asia-Pacific (APAC) region. The region had nearly 42 million SVOD subscribers in 2015, but could have up to 158 million by 2021.
The increasing adoption of smartphones and mobile data is propelling growth in mobile video viewing across APAC, which is poised to outpace the rest of the world.
Rising purchasing power in APAC underlines the opportunity for online video services. China and emerging Asian economies represent nearly two-thirds (63%) of global economic growth.
Content creators and marketers stand to gain from SVOD’s push into the APAC region. Content creators can benefit from the surge in short-form video, while marketers can capitalize on advanced product placements.
In full, the report:
Forecasts SVOD subscribers in the APAC region.
Explores the factors behind SVOD’s slowing growth in the US.
Breaks down reasons why APAC is ripe for massive online video growth.
Discusses who will benefit from SVOD growth in APAC.
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