US streaming wars narrative incorrect as SVOD eats into pay-TV | Media Analysis | Business
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As the launch of direct-to-consumer services from studio-backed owners shows no sign of stopping in 2021, US consumers are not seeing subscription video-on-demand (SVOD) as an either/or but are taking more services and products alongside established players like Netflix and churning out of pay-TV more rapidly says research from MoffettNathanson.
HBOMax 28May2020
In its analysis of US consumers’ structural shift to increased streaming behaviour, MoffettNathanson worked with market research and consulting company HarrisX, taking data from 19,435 respondents between October and December 2020.

In its analysis, MoffettNathanson said that the fundamental dynamic for the was that the Covid-19 pandemic accelerated the adoption of streaming services with Americans finding themselves in front of their screens with few linear options aside from live news and sports and an unlimited bouquet of increasingly excellent streaming content choices.

The study revealed a fourth quarter with a new spike in demand driving streaming penetration of US households to an all-time high of 77%, two percentage points higher than better than 2020’s prior peak of 75% and five points better than December 2019. Nearly every streaming service saw an uptick in the fourth quarter.

On the subject of price, MoffettNathanson continued to see that the leading reason for streaming as a substitute for pay-TV is price. It added that during the ongoing difficult economic times across the US, financial issues would likely be a key driver of near-term cord-cutting as consumers shift to lower-priced SVOD and/or adverting-based VOD (AVOD) options. When asked why they stream as a replacement for pay-TV, at least half of streamers across Hulu (50%), Amazon Prime Video (54%), Netflix (53%) and Disney+ (52%) said it was due to the cost of subscription TV, which they deemed either too expensive or simply not worth the expense. The second most reported reason for cutting the cord in favour of streaming was convenience at 13-17%, followed by content availability and the ability to both avoid commercials and binge watch content.

Netflix was very much atop the US SVOD market, maintaining over 70% penetration of domestic streaming households as the total market continues to grow. Yet MoffettNathanson stressed that Netflix’s share of streaming households has remained in the low 70% range for some time now. By comparison, Netflix’s nearest competitor, Amazon Prime Video, ticked up a bit to around 52% penetration in the fourth quarter, while Disney’s Hulu and Disney+ were flattish, reaching 38% and 31% penetration, respectively, in December. As this data was a measurement of penetration of streaming households, MoffettNathanson said that the growth in new streaming households likely drove individual platform subscriber growth in the fourth quarter relative to material changes in market share.

The research data showed that the average US pay-TV home is now subscribing to an average of 3.33 SVOD services while those homes without pay-TV are averaging 2 SVOD services per home. This said MoffettNathanson was more a pointer to the impact of income on cord-cutting with pay-TV homes being more willing/able to invest in more video products. Netflix subscribers were on average taking about three services while HBO Max customers, who were more likely to have pay-TV subscriptions, are using almost five SVOD services.

MoffettNathanson said that could be interpreted as there appearing to be opportunity to expand consumer take-up of new platforms for cord-cutters if entry-level price points were low, as was the case with Disney+ and Hulu with ads. If anything, noted the analyst, the new incremental services appear to be chipping away at linear usage. That said, and similar to other recent surveys, MoffettNathanson saw struggles with Apple TV+ which it said was still “sputtering” compared with rivals.

Indeed, Apple TV+ and HBO Max experienced meaningful divergences in the fourth quarter of 2020, with the former falling two points while the latter grew by three. This would suggest said that MoffettNathanson HBO Max was starting to get some traction after a slow start, likely spurred by WarnerMedia’s bold decision to take its 2021 film slate day-and-date and an improving content slate.

Looking at usage by age demographic, MoffettNathanson found Netflix remained dominant across the board, especially amongst younger users, while Hulu and Disney+ also slant to the younger side and need to figure out a way to attract older users. On the other hand, Amazon Prime Video and Peacock skew towards older demographics. At lower overall penetration levels, Apple TV+ and HBO Max were mostly steady across each age group.