Ampere: Peacock and HBO Max Appealing to Different Audiences

NBCUniversal’s Peacock subscription streaming video service topped 15 million app subs, while WarnerMedia’s HBO Max surpassed 4.1 million in their respective first month of operation. New data from Ampere Analysis contends consumer response to the two platforms has been positive.

The London-based research firm, citing a survey of 4,000 online respondents in the U.S., found 8% of domestic Internet homes had Max subscriptions, while 7% were using Peacock. Age seems to be a factor among app subscribers.

“Peacock’s early adopters show that it has been successful in converting broadcast channel audiences — who are an older demographic and typically more difficult to convert — into SVOD subscribers, allowing it to play in an arena that is generally less competitive,” senior analyst Annabel Yeomans said in a statement.

Indeed, Max subscribers are 50% more likely to be in the 25- to 44-year-old age group, which is identical to the current HBO pay-TV sub. In addition, Max’s $14.99 — thus attracting 69% of households with incomes of $51,000 or more.

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Meanwhile, Peacock is appealing to slightly older subs (35 to 44), with broadcast programming targeting older viewers, according to Ampere. The report contends 19% of Peacock’s viewers are over 55, compared with 6% of Max viewers. And 54% of Peacock households have total incomes of $51,000 or more.

Peacock, unlike other major SVOD platforms, has a free ad-supported option.

Regardless, content remains king and Yeomans said Max has yet to diversify its audience away from the hardcore HBO pay-TV channel known for high-end drama, comedy and documentaries.

“Nonetheless this is an already-crowded market with strong competitors like, so while increasing the diversity of catalogs and quality of original content will be key to driving scale, playing to each services’ brand and audience strengths should also not be forgotten,” she said.

Ampere: AVOD Attracting Nearly 20% of U.S. Internet Users

Free access to ad-supported video-on-demand content continues to gain traction among viewers in the United States. New data from Ampere Analysis found that about 20% of domestic Internet users are accessing AVOD services such as The Roku Channel, IMDb TV, Pluto TV, Tubi and Shout! Factory TV, among others.

Based on third-quarter (ended Sept. 30) data, 17% of U.S. Internet users streamed one or more AVOD service in the prior month, up from 13% in the previous-year period. The surge in AVOD use has been spearheaded by Fox-owned Tubi, whose content catalog claims to be larger than Netflix’s.

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Similarly to SVOD services such as Netflix, Amazon Prime Video, Hulu and Disney+, AVOD platforms are looking at exponential user growth and consumers migrate away from linear television. But Ampere contends the AVOD audience is older and more likely to be from lower income households than their SVOD counterpart.

“The VOD market continues to expand and fragment, offering viewers more choice of platforms,” Minal Modha, consumer research lead at Ampere, said in a statement. “Despite some resistance to the high levels of advertising on U.S. broadcast channels, 44% of consumers still say that they don’t mind seeing ads on TV, so AVOD services are quickly filling a market position.”

The report says entertainment revenue streams have been under increased pressure in 2020 due to the coronavirus pandemic as advertisers pulled back on spending. At the same time, AVOD remains a novelty among consumers, in addition to being backed by well-funded media and technology firms. As a consequence, the research firm does not anticipate COVID-19-linked ad-demand issues will be a fundamental issue for AVOD distributors.

Although SVOD services in the U.S. currently have higher numbers of monthly active users than AVOD, Ampere found that in Q3 2020, nearly one in five consumers (17%) watched an AVOD service in the prior month.

Ampere says Tubi offers more than 29,000 titles, including five times as many movies as Netflix. It’s beaten only in terms of overall catalog size by Amazon Prime Video. Large catalogs are crucial for AVOD user growth as advertising revenue is highly dependent on user consumption — a contrast to SVOD, which can subsist on smaller catalog, providing key titles are sufficiently high profile.

Despite their similar content catalogs, and the growing user base on AVOD, Ampere believes the two platforms aren’t competing for the same audiences. It contends AVOD users are older than SVOD subscribers, and are more likely to be from lower income households.

The report said 25% of AVOD users are aged 45 to 54, compared with 22% of SVOD viewers; and 19% of AVOD users are aged 55 to 64 versus 14% of SVOD subscribers. Nearly half of domestic AVOD users have an annual household income of less than $30,000 per year, compared to a third of SVOD users. Almost 20% AVOD viewers live in households with annual earnings of less than $15,000 per year.

“With distinct audiences, we believe that these two offerings aren’t competing directly with each other but rather can coexist,” Modha said.

She said that with ViacomCBS, WarnerMedia and NBCUniversal opting for both SVOD and AVOD platforms, in the current climate with both economic uncertainty and a greater need for people to stay at home, there is a market for both.

“We expect the use of AVOD services to continue to rise as more consumers will be turning to these platforms as they seek entertainment without increasing their financial outlay,” Modha said.

Ampere: Delays of Scripted Content to Last Well Into 2021

Producers of new scripted content — which typically spends an average of 11 months in production — will be battling against COVID-related delays well into 2021, far longer than their unscripted counterparts, according to a study from Ampere Analysis.

While producers of new unscripted content — which spends an average of just two months in production — have been able to adapt production to the new circumstances, already overcoming the worst period of delays, the same is not true for their scripted counterparts, according to the analysis.

Compensating for the lack of new high-quality scripted content, unscripted commissions increased from 66% in Q2 2019 to 72% in Q2 2020. Reality shows benefitted the most from this trend with 24% more titles commissioned in Q2 2020 than in Q2 2019.

The temporary stop in production also forced programmers to air older and less popular content to fill gaps, and some have turned to unscripted material to pad their schedules, according to Ampere.

While the proportion of new content aired dropped steadily over Q1 and Q2 2020, unscripted content has already made a rapid recovery, with new titles representing a higher proportion of primetime series than before COVID-19. However, the proportion of new scripted primetime shows has yet to return to pre-COVID levels.

Meanwhile, linear viewers in the U.S. and U.K. rated comedy, crime and thriller, sport, drama, and sci-fi and fantasy as their top five genres in Q1 and Q2 2020 — the same period that saw a considerable decrease in the proportion of new titles aired for all five genres.

“At the time of writing, almost half of all scripted commissions from the first half of 2019 had yet to be released, highlighting the long production periods for scripted shows and the impact of exposure to the COVID-linked production hiatus,” Ampere stated. “As a consequence, delays for scripted titles ordered in the same period in 2020 — also exposed to the production shutdown — will run well into 2021.”

The firm noted BBC’s “Staged,” one of the few scripted drama titles to be produced during lockdown, has already been licensed in multiple markets, illustrating demand for fresh new scripted shows. The series, starring David Tennant and Michael Sheen, follows actors whose play has been put on hold due to COVID-19, but whose director has persuaded them to continue rehearsing online.

While the production of some scripted genres such as drama and romance can often be expedited, the ability to shorten the often lengthy post-production process for genres such as action and adventure, sci-fi and fantasy, and horror — while maintaining output quality — will be key to limiting the onward impact of the pandemic, the research firm stated. Programmers that can air the highest volume of new scripted content, through commissions or acquisitions, in the next 12 months will win over consumers, the firm concluded.

“COVID-19 has hit the production of high-quality, scripted content most severely, and producers will be fighting delays well into 2021,” said Ampere analyst Olivia Deane. “Linear programmers know that viewers won’t accept poor quality content and repeats indefinitely, and they will lose consumers to both broadcast and on-demand competitors if they don’t address the situation fast.

“This is particularly problematic for channels that offer a high proportion of original scripted content. To maintain a competitive edge, they will need to adjust their acquisition models to compete in the race to broadcast new, high-quality content. This suggests a time to shine for independent studios with scripted projects already in the pipeline. However, with indies facing their own delays, it’s likely that supply will be outweighed by demand for the foreseeable future.”

Analyst: Global SVOD Market Can Handle 3 Billion More Subs

Despite the global subscription streaming video-on-demand market reaching service saturation in some parts of the world, new data from Ampere Analysis contends the SVOD ecosystem has room for 3 billion new subscribers. The streaming video market reportedly ended 2019 with 642 million subscribers worldwide.

The London-based research firm says the U.S. will lead with a maximum of eight SVOD services per household, with Europe averaging from two to five services per household, followed by 1.5 services in developing countries.

Despite cord-cutting, the average U.S. household has continued to spend an almost identical amount on TV services every year — $900 — as they switch from cable and satellite pay-TV services to lower-price SVOD services. This stability in expenditure, mirrored in many other markets worldwide, has Ampere suggesting the fundamental determinant of the number of SVOD services in a home will be household entertainment budgets.

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“Even as we begin to see growth in SVOD services in emerging markets, our analysis shows that opportunity for expansion is actually still a very solid proposition in established territories,” research manager Daniel Gadher said in a statement.

The Power of Live Sports

Various factors will limit how close individual markets will get to this ceiling. One issue is sports. Pay-TV operators and networks currently control the majority of key sports rights in many major markets. Ampere’s past analysis has indicated that OTT players are unlikely to be able to wrest control of major domestic events in most developed markets. As a consequence, consumers who want to watch sport will have to continue subscribing to pay TV services. This reduces the available budget for SVOD. In the US for example, factoring in sports spend, the capacity for SVOD services drops from eight per average household to between four and five.

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Factors Influencing the SVOD Ceiling:

Outside the U.S., some major markets are still seeing growth in household spend on TV. However, the underlying rate of change is relatively low. In these markets, Ampere expects growth in household spending on entertainment to increase the ceiling for SVOD services from 20% to 30% over the next five years.

To reach maximum capacity, SVOD spending will have to replace pay-TV spending. A reality undermined by the fact that live sports, key movie and TV content remain tethered to linear television, according to Ampere.

Pricing remains the final key determinant — lower average SVOD service prices driven by competition will mean that household budgets will expand to accommodate more services.

Biggest SVOD Growth Ranges From 2-4 Services Per Household

  • After accounting for factors such as sport and future growth in spending, markets such as the U.K. and Germany have an average household capacity of roughly three services at current price points.
  • But this apparently low capacity still translates into a sizeable number of subscriptions —88 million capacity in the U.K. and a 124 million in Germany.
  • Similarly, in the U.S., even four to five services per household would translate to a total of 510 million to 640 million possible subscriptions.

 

“To make the most of this capacity, OTT players first need to demonstrate that they are a viable replacement for existing paid-for TV services,” Gadher said. “This process is ongoing in the U.S. and Canada, but elsewhere in the world, pay-TV has remained resilient. But as U.S. studio content increasingly moves to the online world, the opportunity for new players to take a share of consumer entertainment spending, even in already busy markets, improves.”

VOD Not Just for Catch-Up Viewing

With the advent of subscription video-on-demand, broadcast TV distributors rolled out video-on-demand options such as HBO Go enabling pay-TV subscribers to access catalog programming on-demand.

With the corporate push by ViacomCBS and Fox Corp. into ad-supported VOD — underscored by acquisitions of Pluto TV and Tubi, respectively, new data from Ampere Analysis finds American and European pay-TV operators are using ad-supported VOD (AVOD and BVOD) to deliver original programming to an increasingly digital-centric consumer.

Pluto TV earlier this year added 24 content channels for distribution in Germany, Austria and Switzerland. The platform continued its distribution strategy of original content through a deal with Verizon encompassing both mobile and pay-TV.

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Tubi has begun streaming the first two seasons of Fox singing competition show “The Masked Singer” — the No. 1 show on television in its third season. It is the highest-profile program on the AVOD platform, which also added “Gordon Ramsay’s 24 Hours to Hell and Back.” All episodes of the first two seasons are now available, while current season-three episodes are available on Tubi a week following their broadcast on Fox.

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German service Joyn, a joint venture between ProSiebenSat.1 and Discovery in the U.S., has commissioned 20 original productions since launch, with shows such as the upcoming coming-of-age thriller, “Catacombs,” targeting a younger audience. Half of its unscripted originals feature YouTubers or social media influencers, with the service developing three new “reality/documentary” shows during lockdown, according to Ampere Analysis.

The London-based research firm said 30% of France Télévisions’ upcoming shows are destined for VOD, with high-profile commissions for digital platform France.tv, including “Louis XXVIII,” a sci-fi drama set in an alternate universe in which the French Revolution never happened.

“BVoD platforms were initially designed for TV catch-up viewing, but in recent years broadcasters have been investing in technical enhancements and original content to beef up their services to attract a young demographic,” Léa Cunat, senior analyst at Ampere Analysis, said in a statement.

Cunat said that while uncertainty looms large regarding return to normal for business and advertisers in the coronavirus pandemic, Ampere’s outlook for BVOD revenue growth is positive.

“We anticipate that the shift to digital marketing will be accelerated if the behaviors consumers have adopted during lockdown persist following the reopening of economies,” he said.

Ampere: U.S. Streaming Households Up OTT Video Services 27%

As expected, the number of over-the-top video services in domestic homes increased 27% in the first quarter (ended March 31) according to new data from Ampere Analysis. The London-based research firm said U.S. streaming households subscribed to 3.3 services in the period, compared with 2.6 services in the previous-year period.

The report said domestic streaming households are paying on average $34 monthly to stream video, compared with $30 monthly in the previous-year period.

“The increase is driven primarily by the launch of Disney+ in November, with some additional growth from Apple TV+,” analyst Toby Holleran said in a statement. “The [$9.99] Disney+, Hulu and ESPN+ bundle has also proven successful; we expect around 10% to 15% of Hulu subscribers to be taking the three-service bundle.”

Holleran expects the average to increase to four households with the arrival of HBO Max and Quibi.

“With many [AT&T, HBO Now] consumers already being converted [to Max] and the 90-day free Quibi trial, the average spend per household won’t have increased much yet,” he wrote.

Separately, revenue from SVOD services is projected to top $12.7 billion in 2020, growing at an annual growth rate of 2.1% through 2024 to $13.8 billion, according to Statista. User penetration is expected to top 40.1%. The average revenue per user (ARPU) currently amounts to $98.19.

Ampere: ‘Low-Level’ Pay-TV Sub Growth Continues Despite Rampant Cord-Cutting

With U.S. pay-TV operators shedding more than 2 million subscribers in the first quarter, new data from Ampere Analysis finds that worldwide pay-TV continues to grow — albeit slowly.

In a study representing 70 pay-TV operators representing about half of the world’s 1 billion pay-TV subs, subscriber totals increased 0.3% in Q1 than in Q4 2019, indicating that despite the challenging times facing the pay-TV business, and the threats from online competition, there is still at least some low-level growth — when including China.

When removing Chinese market leaders — China Telecom, China Mobile and China Unicom — there was a net decline of 0.7% in the quarter. This is an acceleration from the 0.5% decline seen in Q4 2019, and indicative of a worsening outlook for the pay-TV market outside China.

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Of the 70 companies followed, 42% saw growth in the quarter, with positive net additions of nearly 5 million subscribers. This was partially offset by the remaining 58%, which lost a total of nearly 3 million subs. The net effect was a growth of just under 2 million pay-TV subscribers in the quarter, according to Ampere.

Again, however, China continues to have a significant role in keeping the global pay-TV market buoyant. Outside mainland China, pay-TV operators in the rest of the world lost nearly 1.7 million net subs.

In fact, the trend outside China is worsening. In the same period 2019, the same group of companies lost 1.2 million net subs.

While U.S. cable and telecoms groups such as Verizon and Comcast saw significant net declines in subscriber numbers, they have been less badly hit by cord-cutting than their satellite rivals, including DirecTV and Dish Network.

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“Of the bellwether pay TV operators we’re tracking, U.S. groups represent more than half of those firms suffering net subscriber declines,” senior analyst Toby Holleran said in a statement. “But losses aren’t evenly distributed even here — IPTV and cable firms have shown more resilience as a consequence of their ability to better bundle communications and pay TV together, insulating themselves against the worst effects of cord-cutting.”

COVID-19 Hangover: 60% of Scripted Releases at Risk of Delay

Audiences and the industry can expect disruption to the supply and release of new content for more than a year as a result of production delays caused by COVID-19, according to a new report by Ampere Analysis.

The report finds 60% of scripted releases at risk of delay and a further 5% to 10% that may be lost entirely.

“Our analysis indicates that the unscripted market will more easily weather the current pandemic thanks to the production of non-location-based, and COVID-related, content,” according to Ampere. “However, the delay of summer ‘blockbusters’ like ‘The Bachelorette’ and ‘Love Island’ will have a negative impact on even the unscripted sector. We predict the scripted sector will take a far bigger hit: even if production is able to restart in June, underlying effects of the shutdown will be felt in the scripted TV market for the remainder of 2020, and well into 2021.”

In the second half of 2020, Ampere expects that the world’s top TV commissioners will release between 5% to 10% fewer new scripted titles on a monthly basis than previously predicted. The effect will last into the first half of 2021, and potentially longer.

Over half of scripted titles which would normally have released in the second half of 2020 are at risk of delays in release schedules due to the current production hiatus. Titles scheduled for release from June to August are likely to largely be in post-production, and Ampere expects delays will be more limited for this period.

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The number of scripted TV titles at risk of delay remains high for a year, with impact particularly intense at the traditional start of the broadcast season in the autumn. At this point, between 50% and 60% of scripted titles that would normally have been released in the period are at risk of delay by Ampere’s estimates. A further 5% to 10% of scripted titles expected to have been released during the autumn months are likely be lost entirely due to the current production shutdown, Ampere predicts. The proportion of scripted releases unaffected by the shutdown only rises above 40% in March 2021.

Compared to 2019, only 51% of scripted projects ordered during March through May 2019 have been released to date. With commissioning of scripted content down by 40% in the equivalent period of 2020, Ampere predicts the current lack of commissions will impact the supply of content well into 2021.

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“There is one certainty among the current uncertainty — that the COVID-19 pandemic will change the TV production industry far beyond the end of the lockdown,” Ampere senior analyst Fred Black said in a statement. “Initially, we expect delays to cause gaps in scripted TV release schedules, which broadcasters and streaming players will have to fill with other content. However, as delayed productions begin to fill out content gaps in later months, these gaps will begin to close. But this has further ramifications. The knock-on effect of delayed releases is a likely depression of the number of new commissions for some time after the shutdown ends, as commissioners look to fill schedules with delayed projects they have already invested in before signing off new ones.”

Unscripted content is set to bounce back quicker, according to Ampere. While a number of unscripted commissions expected over Q2 and Q3 2020 will be delayed, Ampere predicts release schedules will begin to return to normal by the autumn, with the percentage of titles unaffected rising to 71% by October. The biggest misses in the unscripted space are likely to be returning summer series that cannot go into production, such as reality stalwarts ‘Love Island’ and ‘The Bachelorette.’ Unscripted commissions have actually increased in comparison to the same period last year, partly to fill schedule gaps left by delayed or cancelled scripted series. However, a large proportion of these titles have been COVID-19-specific commissions. If this content is excluded, unscripted commissions have been down 27% since the beginning of March. Unlike scripted content, commissioners can typically order enough adapted unscripted content during lockdown to cover normal numbers of new unscripted releases, as well as help cover schedule gaps from delayed or cancelled scripted content.

Commissioners are currently creating a large number of extra unscripted projects which can be used to cover gaps in the schedule left by delayed titles or the missed scripted commissions,” said Black in a statement. “This number of extra commissions will begin to wane as the shutdown ends, with audience appetite for COVID-19-specific content already showing signs of falling.”

Research: SVOD Wakes Up to Reality

Reality was the second-most commissioned genre for linear services and third-most commissioned genre for video on-demand (VOD) services, according to research from Ampere Analysis on commissions, renewals and cancellations in 2019.

Data from Ampere indicates that Netflix has ramped up production of reality content compared with previous years. While in January 2018 Netflix had four original reality TV shows available, by year-end 2019, the number had grown eightfold to 32 original reality titles, with dating show “Love Is Blind” among its top-performing shows in Q1 2020.

Other findings include:

  • The most commissioned genre in the United Kingdom and the United States in 2019 was documentary, with one-off commissions a frequent occurrence. Documentary represented 31% of all first-run series ordered in 2019.
  • The second most commissioned and renewed genre was reality — at 14% of all commissions in 2019.
  • In total, 337 reality shows were commissioned in the United Kingdom and the United States.
  • Comedy closely followed reality and was the third-most commissioned and renewed genre. Almost one quarter (23%) of shows are yet to begin series production, reflecting the longer production period required for scripted series. First-run commissions accounted for 67% of all series announced in 2019 — this means shows being ordered for a first season, including limited series.
  • Most renewals were reality (24%), with comedy (17%) and documentary (17%) following closely behind.

Linear versus VOD findings include:

  • Renewals in 2019 are skewed towards linear commissions, with linear series representing 85% of all U.K. and U.S. renewals in 2019.
  • High-profile unscripted linear renewals included 19th and 20th season order for MTV’s U.K. Reality series “Geordie Shore,” and a 17th season order for NBC’s music competition show “The Voice.”
  • In 2019, linear channels cancelled 515 shows while VOD services cancelled 151. However, this is slightly skewed by the cancellations of series with a predetermined limit on the number of episodes. Once these shows are removed from the analysis, data shows that linear channels cancelled 178 shows, while VOD services cancelled 66.
  • 65% of linear renewals were unscripted series, in comparison with just 25% of all VOD renewals, with streamers preferring to focus on higher-budget, scripted fare.
  • Reality was relatively safe from cancellation on both linear and VOD platforms — only 8% of all cancellations were reality.

“While reality has been a staple for linear TV due to lower per-hour production costs and continued popularity among consumers, VOD services have been increasingly investing in the genre,” said Ampere analyst Olivia Deane in a statement. “With Netflix already commissioning two more seasons of top performing title ‘Love is Blind,’ reality looks like it will be the next battleground for linear and VOD services.”