SVOD in the US and UK: A tale of three-player markets

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SVOD in the US and UK: A tale of three-player markets

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SVOD in the US and UK: A tale of three-player markets
There is a belief in some quarters that there is space for a myriad of large SVOD services in the UK
  • We question whether there is room for more than the current three pacesetters; Netflix, Amazon and NOW TV
Like the UK, the US market is dominated by three services, but there is also evidence that there is appetite for further offerings: Netflix households tend to take a secondary SVOD service to complement Netflix’s content library, and are likely to take up a third service, and in some cases a fourth and fifth
  • Despite also having a big three, the US market is conspicuously different to that in the UK. The sheer size of the US, its high penetration of pay-TV and lofty cable prices create an environment that encourages skinny bundles, and exposes the market to cord-cutting; the UK is not affected by these forces to the same extent
Potential domestic UK services will struggle to compete with the resources that foreign tech giants can marshal, along with NOW TV’s steady position and top content
  • Netflix and Amazon have far greater access to financing than traditional media companies, and are given more leeway to loss-lead than their competitors. Hulu harnesses the might of a number of major US companies
    • Netflix will invest $1.2bn in tech this year, have a $12 billion cash content spend and invest $1.9 billion in marketing
    • Netflix announced on 22 October plans to raise $2 billion in debt, which is in addition to the $3.1 billion raised in the past 12 months
    • Hulu’s forecasted loss in 2018 is expected to be $1.5 billion—funded by its shareholders