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YouTube’s subscription-video-on-demand (SVOD) offering, YouTube Red, is reportedly struggling to grow its subscriber count.

According to figures cited by The Verge, the service has added 1.5 million paying subscribers since launching at the end of October 2015, and another 1 million people are testing the service on free trials.

YouTube Red is priced at $10 a month, and provides an ad-free experience, access to exclusive content, and offline playback capabilities. The service’s exclusive content, dubbed Originals, leans heavily on the platform’s crop of homegrown stars, which has helped attract loyal YouTube users to the paid service.

But while YouTube Red’s performance may be underwhelming, the platform still exhibits tremendous potential for future growth.
  • It’s outpacing other web TV products on the market. Red is growing faster than CBS All Access, Sling TV, and PlayStation Vue, and edges these services in terms of market share, according to a survey by Digitalsmiths. CBS All Access has added about 1 million subscribers since launching in October 2014, Sling TV has racked up about 700,000 subscribers since its debut in February 2015, and Vue is estimated to have between 100,000 to 120,000 subscribers.
  • The quality its video programming is set to improve. The company is doubling down on expensive, high-quality content. It is building production studios in YouTube offices worldwide, which the platform’s top creators can tap into. It also plans to add content from produced by the likes of Lionsgate, Dwayne “The Rock” Johnson, and director Doug Liman. It’s also training YouTube stars to create VR content specifically for YouTube Red.
  • Music can also be a big lure to drive subscriptions. YouTube’s dedicated music experience, YouTube Music, is available in full through a Red subscription. Although it’s nominally a video platform, YouTube also has the biggest music library by far, with an estimated 1 billion songs. The company said it’s increasing marketing of YouTube Music, and only needs to convert 3% of its 1 billion-strong monthly user base to YouTube Red to match Spotify’s paid subscribers.
  • The service has barely rolled out internationally. It’s is only available in four countries. After debuting in the US in October 2015, YouTube Red expanded to Australia and New Zealand in May 2016, before rolling out in Mexico this past August. Netflix, meanwhile, is available in 190 countries, while Hulu operates in the US and Japan. Tidal is available in 52 countries, and Spotify in 60 countries.

Margaret Boland, research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on subscription video on-demand services that examines how the growth of SVOD is coming at the expense of the pay-TV industry. The report analyzes the state of the pay-TV industry and maps out which demographics are more likely to stop buying traditional TV packages.

The report also discusses the user base, original content offerings, and subscription models of the major subscription streaming services available today, including Netflix, Hulu, and Amazon Video. Finally, it looks at how traditional pay-TV companies and premium channels like HBO and Showtime are addressing the shift to digital viewing, as well as the implications of their response for advertisers.

  • Those abandoning pay-TV packages fall into three main groups: cord-nevers, cord-cutters, and cord-shavers. Whereas video streaming services have found favor with younger viewers in particular, an increasing portion of older subscribers also are leaving behind their pay-TV packages. Still, younger viewers watch four times as much video content online than older viewers.
  • Netflix is the largest SVOD service and will continue to dominate the industry with an impressive original content lineup and aggressive expansion plans.
  • Amazon is trying to compete with Netflix by investing significant resources in original content.
  • Hulu is the third-largest SVOD service, but the only one to offer ad-supported membership tiers. Hulu has been the slowest to roll out original and exclusive content, but it has inked numerous deals in the past year to boost its content library.
  • Pay-TV companies are responding to the rise of SVOD services by offering subscribers “skinny bundles” and their own streaming services.

In full, the report:

  • Illustrates the fall of the traditional TV package and the rise of broadband only cable subscriptions.
  • Lays out the different types of viewers that are leaving behind pay-TV: cord-cutters, cord-shavers, and cord-nevers.
  • Examines the leading SVOD services including Netflix, Amazon Prime Video, Hulu, and premium channel offerings from HBO and Showtime.
  • Explains the various ways that pay-TV companies are responding to the rise of SVOD services, notably skinny bundles and standalone streaming services.
  • Considers what the migration to SVOD services means to marketers.

To get your copy of this invaluable guide, choose one of these options:

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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of subscription video on-demand services.