The consumer video media services market is worth over $300 billion a year globally, with pay television accounting for 90% of that. In 2017, consumers will spend over $18 billion on subscription video-on-demand services like Netflix, up 28% on the previous year. Spending on such services will continue to rise, but pay television will still represent over 86% of direct consumer spending on video services in 2020.

Gartner forecasts that global consumer spending on video services will be $314 billion dollars in 2017, up from $301 billion in 2016. The highest growth will come in the emerging Asia Pacific and Middle East and North Africa regions.

So-called over-the-top services, delivered over the internet, are rapidly growing revenues, albeit from a much smaller base than traditional pay-television services.

“OTT-VOD sources are changing the landscape,” said Derek O’Donnell, senior research analyst at Gartner. “OTT-VOD services are the fastest-growing segment in the VOD landscape and eroding pay-TV providers’ share of revenue. OTT-VOD sources began outperforming traditional pay-TV sources in 2016.”

End-user spending on consumer video media services worldwide 2016-2020. Source: Gartner.

Gartner forecasts that total consumer spend on video services will increase by 18.8% from 2016 to 2020. Spending on pay-television services will increase by 12.3%, while spending on subscription video-on-demand services will rise by 106% to over $30 billion a year. Consequently, the share of spending on traditional pay-television services will fall from 91.3% to 86.2%. Nevertheless, pay-television spending will continue to grow through to 2020, reaching $309 billion dollars a year, which is over time times that of subscription video services.

In 2016, Netflix recorded revenues of $8.8 billion, with a net income of $186.7 million. In comparison, Comcast reported annual revenues of $22.4 billion for video services alone and its cable business generated $3.7 billion in operating cash flow.

Forecast Analysis: Consumer Video Media Services, Worldwide, 1Q17 Update is published by Gartner.