September 17, 2019
New research from Parks Associates finds that subscriptions, formerly representing just over half of total online video spending in 2012, now account for nearly 86% of all internet spending on TV and movies.
The Dallas-based research follows analysis of market trends and profiles of OTT video service providers in the U.S. and Canada, including Netflix, HBO, YouTube, and Amazon as well as new services Disney+, HBO Max, and Frndly TV.
“The new services launching over the next several months are taking different approaches as they enter a crowded OTT market,” said Brett Sappington, senior research director and principal analyst. “While the U.S. market is important for Disney, the company will ultimately measure the success of its Disney+ service on a global scale.”
Sappington believes AT&T sees its formerly branded DirecTV Now (now AT&T TV) service as the evolution of its core pay-TV business rather than as an extension of its vMVPD efforts.
The Frndly TV is a niche play Sappington says is targeting a specific group of consumers with a low price and family-friendly content.
Parks says the new services, including Apple TV+, will drive consumers to increase spending on internet video and maximize the proportion of spending on subscriptions. The increasing number of new services will also test consumers’ tolerance for adding new accounts to their monthly expenditures.
“The amount of money consumers spend per month will spike, at least in the short term, as new services such as Disney+ and Apple TV+ become available. Tradeoff decisions will come later,” Sappington said. “To keep consumers spending at this higher level, services will have to consistently deliver volumes of compelling content within an engaging user experience.”