The worldwide traditional digital pay TV market continues to grow despite a dragging economy and an increase of viewing of movies and TV programs on the Internet, and we expect to see continued growth as many traditional pay TV providers are increasing their use of the latest video compression technology -- MPEG-4 AVC -- on existing networks. While DTC estimates that subscribers to these pay TV systems will grow from about 142 million in 2011 to 354 million in 2015, sales of premium MPEG-4 AVC video on demand (VOD) content by traditional pay TV providers are estimated to be much lower. DTC projects only 27 million VOD units will be purchased in 2011, and just over 81 million units will sell in 2016 across all three platforms.
This imbalance exists, in part, because the percentage of VOD content purchased remains small in comparison to free VOD (free with subscription) content as the overwhelming majority of activity is taking place within existing basic or premium “all you can eat” subscription plans. Adding to the low sales numbers are the additional (and sometimes free) alternatives pay TV subscribers have when watching content on an on-demand basis with the proliferation of over-the-top (OTT) video services from providers such as Netflix and VUDU.
PPV and VOD have traditionally been a hard sell for pay TV operators, and the combination of free on-demand content, subscriber VOD, OTT TV and movies, and a dragging economy are all contributing to a lack of appetite for purchasing PPV/VOD titles.
