May 2, 2019
With more than 1.23 billion people projected to subscribe to over-the-top video platforms by 2023, new data from German consultant Simon-Kucher found that 84% of U.S. survey participants have already replaced traditional TV with SVOD.
Indeed, 62% of U.S. respondents in the March/April survey of 490 respondents from nine countries (Australia, Brazil, Chile, France, Germany, Mexico, Singapore, U.K., U.S.), said they considered linear TV irrelevant.
“Growing numbers of viewers have turned their backs on linear television,” Lisa Jaeger, partner at Simon-Kucher, said in a statement. “They increasingly prefer ad-free video streaming services, a trend that will impact TV advertising on a grand scale.”
In the U.S., the study found the top reasons cited for subscribing to a streaming service is the availability of a broad range of high-quality content, followed by price. Content exclusivity was listed as being least important.
“These insights give providers some leeway when it comes to pricing,” analyst Eddie Hartman said. “Provided they offer attractive content and remain ad-free, they can ask customers to pay a modest premium.”
Nearly 40% of U.S. participants prefer paying a higher monthly charge in exchange for having no commercial interruptions to their viewing experience, according to the report. Thirty-four percent indicated a willingness to accept a small number of ads in exchange for a lower monthly charge, and 7% percent a free, ad-supported plan.
Simon-Kucher contends Disney’s pending $6.99 streaming service Disney+ isn’t expected to disrupt the market. The study also revealed that potential users already find the Apple TV+ offering to be attractive, with 31% of U.S. respondents stating they would definitely subscribe to it, 56% stating they would consider subscribing to it, and 13% expressing no interest in it.
However, it appears unlikely that Apple will drive established OTT competitors out of the market, with 41% of U.S. survey respondents stating they would use Apple TV+ in addition to existing subscriptions, while another 41% would use Apple TV+ and probably cancel at least one existing subscription. No respondents stated an intent to use the Apple service exclusively and cancel all existing subscriptions.
“These findings are actually good news for the entire industry, with streaming providers having the chance to co-exist,” Jaeger said. “But to set themselves apart from competitors, they will need to commit to providing content that is attractive to consumers.”