Assessing the Contribution of Subscription Video-On-Demand Providers to European Content Production

The Situation

Video streaming over the Internet has made it easier for citizens to access video content of their choice. It has also allowed subscription video-on-demand providers to deliver a broad choice of content and tailor their offerings to the tastes of specific customer segments.

Video streaming gives European content creators an opportunity to globally distribute their works over a high-capacity, low-cost channel. It also presents a challenge to European content producers and media because it pushes them to adapt their business models to the new environment.

NERA's Role

NERA was retained by Prime Video to analyze the impact of subscription video-on-demand (SVOD) on European content producers, both in economic terms and in how they contribute to the development and diversity of European content production. The team, led by NERA Associate Directors Dr. Bruno Soria and Adrien Cervera-Jackson, analyzed the changes to the audiovisual industry economics driven by video-on-demand, assessed competition in the European SVOD market, identified the role of European content in SVOD provider strategies, and estimated the economic and social contribution of SVOD providers to the European video production industry.  

The Result

NERA concluded that European content is a key element of the SVOD business strategy because it enriches customer offerings without displacing other premium content. The report also found the European audiovisual market to be competitive: SVOD providers compete with successful media incumbents; the SVOD segment itself is now competitive; and it is becoming even more competitive as it sees new entry and expansion by incumbent major studios, small European start-ups, and traditional broadcasters. NERA also found that SVOD providers are driving the growth of the European video production industry; despite lower costs in other regions, they are commissioning a large and growing number of European productions, with their investment in European content accounting for 65% of the European production industry’s growth between 2014 and 2019. The report estimates SVOD-commissioned productions created about 65,000 full-time equivalent (FTE) direct jobs in the European production industry (22% of total industry employment) in 2019 and the overall impact on the European economy in 2019 was approximately 200,000 full-time jobs and €12 billion of Gross Value Added (GVA).