Subscription OTT services that are driven by linear streaming, as opposed to library catalogues, are the fastest growing segment of the online video market now. They currently account for one-fifth of the global OTT market but by 2022 they will represent at least one-third of the market, according to Ovum.
Tony Gunnarsson, Principal Analyst, TV & OTT Video at the research firm, gave a break-down of the figures at OTTtv World Summit this week showing that this category – labelled SLIN by Ovum to represent ‘Subscription Linear’, and including everything from Sling TV and Canal Play to Amazon Channels and special interest services like ‘Horse & Country TV’ – is already having a bigger impact in Europe than the top-line average global figures would suggest. SLIN services already account for around 37% of OTT subscriptions in France, around 31% in the UK and around 28% in Germany.
[The 2017 numbers given by Ovum are: UK, 13 million total OTT subs made up of 9m SVOD and 4m SLIN; Germany, 7m total, 5m SVOD and 2m SLIN; France, 4m total, 2.5m SVOD and 1.5m SLIN.]
Gunnarsson admits that the definition of SLIN is imperfect because it means services that contain both linear and on-demand elements behind a pay wall. So pure linear and hybrid linear/VOD goes under the SLIN banner.
The logic behind this is that a service containing both linear and on-demand more closely mirrors a typical Pay TV offer. Ovum wanted to create a clear distinction to highlight the growing influence of the ‘subscription linear’ OTT services, which the analyst firm believes are more likely to be used as a substitute for traditional Pay TV than SVOD services are. Ovum also believes that SLIN will start to eat into the market share of SVOD services.
Moreover, with Netflix growth rates set to fall into single-digits over the next few years (according to Ovum) Gunnarsson pointed out that SLIN is going to become the growth-engine for OTT video.
Ovum divides SLIN into three broad categories. These are:
- Linear OTT services from Pay TV operators, like NOW TV from Sky, DirecTV Now from AT&T, Sling TV from DISH, and Canal Play. These tend to be [but are not exclusively] ‘skinny bundle’ offerings, providing an entry-level Pay TV service, but only online. “Up until now, these have been used to segment the customer base rather than to compete with the core operations,” Gunnarsson notes.
- The second category is direct-to-consumer services (D2C/DTC). These include offers from traditional channel owners, such as HBO Now and CBS All Access and Showtime, and services launched by rights-owners, usually for sport. The latter include services like MLB.TV, WWE Network, MLB.tv and NHL.tv. This rights-holder model has been pioneered by U.S. sports leagues. The D2C category, according to Gunnarsson, is aimed at cord-nevers and cord-cutters and those who want access to content outside the home.
- The third category is made up of streamed games services like Twitch (Twitch Prime is included with Amazon Prime).
Ovum says SLIN services are differentiated from SVOD services, beyond the fact that they have linear streaming, by their content and windowing. “Many SLIN services offer first-run TV shows at the same time as traditional TV, especially live sports coverage and other premium content historically restricted to traditional broadcast TV windowing – and denied to SVOD providers such as Netflix until later release windows,” the company explained earlier this year.
Ed Barton, Chief Analyst for Entertainment at Ovum, said in June: “SLIN promises the heady combination of the scale and accessibility of OTT with the economics of TV. Its success, or otherwise, will probably only be revealed slowly. Furthermore, the outcome will probably be different depending on where in the world you’re looking.”
Gunnarsson told OTTtv World Summit that there are several things we should look out for when judging the impact that SLIN is having in the market. These include price pressure building against [traditional] Pay TV, what happens to sports rights, how Netflix responds (and as you can read here, the SVOD giant categorically ruled out linear channels this week) and how Amazon develops its Amazon Channels service. Amazon Channels is an aggregation of multiple third-party OTT services within one UI, under an Amazon Prime subscription, and you can read more about it here.