IHS: Netflix to Pass 100 Million Subs Worldwide by 2018

LONDON: Netflix is forecast to surpass 100 million subscribers globally by 2018, according to IHS Technology, which finds that traditional channels are embracing direct-to-consumer strategies in order to compete.

“The core concept of the channel is fragmenting, as audience behavior is changing and broadcasters are adapting to meet evolving viewer needs,” said Ted Hall, research director at IHS Technology. “The traditional linear channel will be around for a long time to come, but it will become increasingly marginalized by a plethora of online services, from catch-up TV to TV Everywhere, pay-TV channels’ streaming offerings and YouTube multichannel networks.”

Direct-to-consumer (D2C) offerings are being embraced by traditional channels now more so than ever before. “HBO Now, Discovery DPlay and DisneyLife are leading the way and employing a strategy that not only gives them more power in carriage-fee negotiations, but also allows them to grab their piece of the growing online-subscription revenue pie,” Hall added.

The growth in popularity of Netflix is one of the key factors spurring the launch of D2C offerings as well. “Excluding spend on sports, in 2013 and 2014, Netflix outspent almost everyone on original and acquired content. In 2014, Netflix’s content spend was about double that of ITV and Amazon,” Hall noted.

“Between now and 2019, we forecast subscriptions will grow by 22 percent, with 10 million new subscribers to be added in the U.S.,” commented Dan Cryan, senior director of media and content at IHS Technology.

“International subscribers are key for Netflix,” Hall said. “As Netflix invests more in international content, we expect to see huge growth in Western Europe over the next three years, with 10 million new subscribers to be added to its already burgeoning international base.”

The U.K. is expected to be the number one market in Europe for Netflix, with 7.1 million paying subscribers by 2018.