A new study from Hub Entertainment Research has found that streaming video over online platforms is “comfortably” surpassing traditional pay-TV with Netflix maintaining its steady climb as consumers’ TV “default” while live TV has continued its steep drop over the past four years.
The Decoding the Default study was conducted in August 2020 among 1,600 US consumers with broadband, aged 16-74 who watched at least an hour of TV per week. The 2020 report marked the fifth anniversary of the research programme which tracks the TV source that consumers consider their TV home base, that is what they turn on first when they’re ready to watch.
Hub noted that viewers’ choice of default was being driven primarily by two factors: content and ease of show discovery. The top reason for making a source a default was because it offered access to one’s favourite shows. But a more general content consideration was a top driver as well, with a wide variety of shows and movies to choose from. Interface simplicity was also a top driver of default: in particular, the service makes it easy to find something to watch.
The 2020 study identified viewers’ “home base” and the considerations that drive their choice of default. The fundamental finding was that online TV sources — including streaming on-demand services like Netflix, free services like Pluto TV and virtual MVPDs like YouTube TV — are now the TV go-to for half of all TV consumers. The 50% who said an online service was the first source they turn on, was up three percentage points on the previous year. Just over two-fifths (42%) said that their first choice was viewing from the traditional TV set-top box — that is live viewing, DVR or video-on-demand — which was down from 47%. The remaining viewers defaulted to viewing over-the-air, from an antenna.
For those who defaulted to an online source, nearly half, 23% of the 50%, said that online source is Netflix. The subscription video-on-demand (SVOD) leader was by itself now nearly as likely to be consumers’ TV home base as all live TV channels accessed through pay-TV combined. Pointing out the rate of growth and the underlying trends, Hub noted that back in 2016, live TV from a pay-TV service was three times as likely as Netflix to be viewers’ TV default. Netflix alone current trails live viewing by only 7 percentage points.
Looking at age demographics in order to ascertain where exactly this growth was coming from, the study found that fewer than a fifth of consumers defaulted to live TV, down 7 points from last year. But more ominously, said Hub, even among live TV’s strongest adherents—those age 55 or older—the proportion defaulting to live has dropped significantly since just last year. Only 14% of 18-34 year olds turned to live TV before any other source, compared with 21% in 2019. There was also a 7-point drop among 55+ year olds for whom fewer than half now say live TV is their viewing home base.
And to emphasise the importance of the base level option, the study found that when consumers decided it was time to cut back on TV services, they were much more likely to remain loyal to their TV service default. When asked to indicate us which one TV service they’d keep if they had to drop all others, consumers said that among users of each, their pay-TV service and Netflix were the two most likely to make the cut.
However, among users of each service who also treat it as their default, the proportions saying they’d hang on to the service to the bitter end are much higher. For subscribers to the leading four SVOD services — Netflix, Amazon, Hulu, and Disney — loyalty to the service is 2 to 4 times higher among those who default to the service vs. users of each service overall.
“We’ve seen a significant boost in streaming TV service subscriptions since the start of the pandemic in March of this year,” said Peter Fondulas, principal at Hub and co-author of the Decoding the Default study. “But perhaps more significant than the simple increase in online subscriptions is the profound shift in consumers’ viewing behaviours generally. Instead of reaching first for the cable remote when it comes time to watch TV, more and more consumers are defining TV viewing, first and foremost, as viewing on streaming services. Whether that shift persists once the pandemic crisis has passed is, of course, the billion-dollar question.”
Hub noted that viewers’ choice of default was being driven primarily by two factors: content and ease of show discovery. The top reason for making a source a default was because it offered access to one’s favourite shows. But a more general content consideration was a top driver as well, with a wide variety of shows and movies to choose from. Interface simplicity was also a top driver of default: in particular, the service makes it easy to find something to watch.
The 2020 study identified viewers’ “home base” and the considerations that drive their choice of default. The fundamental finding was that online TV sources — including streaming on-demand services like Netflix, free services like Pluto TV and virtual MVPDs like YouTube TV — are now the TV go-to for half of all TV consumers. The 50% who said an online service was the first source they turn on, was up three percentage points on the previous year. Just over two-fifths (42%) said that their first choice was viewing from the traditional TV set-top box — that is live viewing, DVR or video-on-demand — which was down from 47%. The remaining viewers defaulted to viewing over-the-air, from an antenna.
For those who defaulted to an online source, nearly half, 23% of the 50%, said that online source is Netflix. The subscription video-on-demand (SVOD) leader was by itself now nearly as likely to be consumers’ TV home base as all live TV channels accessed through pay-TV combined. Pointing out the rate of growth and the underlying trends, Hub noted that back in 2016, live TV from a pay-TV service was three times as likely as Netflix to be viewers’ TV default. Netflix alone current trails live viewing by only 7 percentage points.
Looking at age demographics in order to ascertain where exactly this growth was coming from, the study found that fewer than a fifth of consumers defaulted to live TV, down 7 points from last year. But more ominously, said Hub, even among live TV’s strongest adherents—those age 55 or older—the proportion defaulting to live has dropped significantly since just last year. Only 14% of 18-34 year olds turned to live TV before any other source, compared with 21% in 2019. There was also a 7-point drop among 55+ year olds for whom fewer than half now say live TV is their viewing home base.
And to emphasise the importance of the base level option, the study found that when consumers decided it was time to cut back on TV services, they were much more likely to remain loyal to their TV service default. When asked to indicate us which one TV service they’d keep if they had to drop all others, consumers said that among users of each, their pay-TV service and Netflix were the two most likely to make the cut.
However, among users of each service who also treat it as their default, the proportions saying they’d hang on to the service to the bitter end are much higher. For subscribers to the leading four SVOD services — Netflix, Amazon, Hulu, and Disney — loyalty to the service is 2 to 4 times higher among those who default to the service vs. users of each service overall.
“We’ve seen a significant boost in streaming TV service subscriptions since the start of the pandemic in March of this year,” said Peter Fondulas, principal at Hub and co-author of the Decoding the Default study. “But perhaps more significant than the simple increase in online subscriptions is the profound shift in consumers’ viewing behaviours generally. Instead of reaching first for the cable remote when it comes time to watch TV, more and more consumers are defining TV viewing, first and foremost, as viewing on streaming services. Whether that shift persists once the pandemic crisis has passed is, of course, the billion-dollar question.”
