Report: U.S. Continues to Lead Global Online Video Consumption

With the United States the birthplace of subscription video-on-demand, YouTube and other over-the-top video platforms, it should be no surprise that it leads Europe in the consumption of video on smart phones and TVs.

But Europe is catching up, according to new data from Ampere Analysis.

The London-based research firm found that 32% of broadband users in the U.S. streamed video on their smartphone in the third-quarter (ended Sept. 30) compared to 23% in Europe. Consumption of OTT video on the TV was 66% in the U.S. and 60% in Europe.

Indeed, Europeans now consume more online video on the computer, including laptops and tablets (65%) than do Americans (61%).

“As online video viewing in the U.S .continues to grow, consumers are watching TV and film content on a wide range of devices, especially smart TVs and smartphones,” analyst Hannah Walsh said in a statement.“While the online video sector in the US has developed faster than European markets, a similar trend can be seen in both regions.”

Ampere found that 47% of U.S. survey respondents preferred using OTT video platforms (19% very strongly) to watch movies and TV shows compared to 35% (11%) in Europe.

“As [SVOD] continues to progress in European markets, the proportion of consumers who watch video on smartphones will rise, alongside the number of consumers who use online video services as their main way to watch TV,” said Walsh.

 

Ampere: Facebook Video Losing Traction Among Users

Despite a monthly global users base around 2 billion, Facebook users aren’t streaming much video, according to new data from Ampere Analysis.

The London-based research firm found that video streaming among Facebook users in the United States dropped to less than a quarter (23.7%) in the third quarter of 2018, compared to 35.5% in Q3 2016.

The social media platform also saw streaming video usage declines in Italy (down 6.7%) and Denmark (6%). In the U.K., which has seen ongoing video declines on Facebook since Q3 2017, reported a 1.6% uptick.

Google-owned YouTube remains the No. 1 (68.3% usage) video platform in the world catering to an endless supply of third-party user-generated content, in addition to commercial product. No. 2 is Netflix (35.4%), followed by Facebook, Instagram (17.8%) and Amazon ranked fifth with 11.7%.

“The apparent declining engagement with Facebook video is potentially symptomatic of some of the wider challenges Facebook is facing engaging younger audiences at the moment, and the impacts of the negative press surrounding the use of Facebook data in political campaign targeting,” Richard Broughton, director at Ampere Analysis, said in a statement.

“Nonetheless, video remains a priority for Facebook’s growth strategy, and recent investments in new video ad formats, as well as partnerships in the sports sector, highlight the forward-looking efforts that the social media giant is putting in to expanding this part of its business.”

Indeed, on-demand video service Facebook Watch launched Aug. 10, 2017 featuring ad-supported original and third-party content.

The service Oct. 16 bowed a new series from Whistle Sports, whose investors include NBC Sports and Sky Sports, dubbed “Famous Los and Filayyyy Show,” and featuring the two Instagram stars offering colorful insight on sports.

Other original Watch content includes “Bad Jokes,” “Whistle Worthy,” “The Loop,” “No Days Off,” and “Courtyard: Unstoppable.”

Report: U.S. Movie Consumers Remain a Fragmented Audience

The good news is that American consumers still covet movies. The summer domestic box office was the second-highest in history at $4.8 billion – erasing the gloom of 2017, which was the worst for theatrical revenue in 10 years.

For industry markets, however, Americans remain fragmented in how they consume movies and distribution channels delivering them, according to new data from Ampere Analysis.

The London-based research firm said movie distribution includes premium channels such as HBO, Epix, Showtime and Starz; buying/renting DVD and Blu-ray Discs; subscription streaming video; digital/pay-TV purchases/renting and theatrical.

In a survey of 4,000 respondents, 71% said they subscribed an over-the-top video service offering movies; 51% frequent movie the cineplex; 37% buys packaged media; 32% subscribe to a premium movie channel; and 26% buy/rent digital movies.

Ampere said 97% of people who went to movie theaters at least once in the last six months also have an SVOD service that offers movies. Another 54% have access to a premium movie channel; 45% purchase/rent DVD/Blu-ray/digital titles; 19% buy/rent packaged media exclusively; 8% rent/purchase movies exclusively online or through a pay-TV operator; and 5% only rent/purchase movies.

SVOD-only respondents (those who don’t purchase or rent movies, visit movie theaters/cinemas or have premium channels) are now the largest category, at 15% of U.S. respondents, but there are a wide range of other access means in use.

Half of domestic Web users visit movie theaters at least infrequently, while over a third buy or rent DVD/Blu-ray.

Ampere said theatrical distribution is a key mechanism for reaching older consumers, who it claims are under-represented across all distribution categories relative to the average U.S. consumer.

 

Report: OTT Video Platforms Upping Original Content to Bridge Netflix Divide

With Netflix reportedly spending upwards of $13 billion on original content in 2018, over-the-top video competitors Amazon Prime Video, Facebook, Apple and Google-owned YouTube are ratcheting up their content spend in an effort to remain competitive.

Netflix has greenlighted more than 250 original titles – double the output from two years ago as Disney begins to pull original movies from the service for its own OTT ventures, according to Ampere Analysis.

The London-based research firm said Apple, YouTube Premium (formerly You Tube Red) and Facebook have greenlighted 65 combined original productions, with YouTube slating 50 original shows by the end of 2019.

Upstart OTT video services from Disney, Britbox and WarnerMedia’s DC Universe have disclosed original content forays – including 19 titles from Disney that include spin-offs High School Musical and Monsters Inc.

AMC Networks’ Acorn TV and rival BritBox are in a race to stream original British fare to American viewers. Acorn TV just announced a new co-production for “Blood,” a six-part thriller. Other titles include Agatha Christie’s “The Witness for the Prosecution,” “Love, Lies & Records,” and “Striking Out.” It also has exclusive rights to season two of “Jack Irish.”

In April, the company also acquired exclusive digital and home video rights from DCD Rights for Season 2 of the critically-acclaimed mystery series “Jack Irish.”

BritBox, the OTT video service from BBC Studios and ITV, is developing “Dark Heart,” “Three Girls,” “Bancroft,” daytime drama, “Shakespeare & Hathaway,” “Hold the Sunset,” and “The Bletchley Circle: San Francisco.”

Sony Crackle, the ad-supported OTT video service, original content includes comedy “Accident Park,” and dramas “The Butcher,” “CAPO,” “The Row,” “RPM,” “The Transplant,” and “Tribes,” among others.

“With so much new content being produced across a range of subscription services, [Apple, Facebook, YouTube] are under increasing pressure to create content that not only attracts new audiences but also prevents existing consumers from churning,” analyst Richard Cooper said in a statement.

Specifically, Cooper said OTT players are increasingly opting for niche titles in an effort to differentiate themselves across different genres. Indeed, comedy is the most greenlighted genre, followed by science fiction.

Apple TV’s high-profile content includes a reboot of Steven Spielberg’s 1980s anthology series “Amazing Stories,” in addition to “Are You Sleeping,” Oscar-winner Octavia Spencer and Aaron Paul (“Breaking Bad”); psychological thriller “Calls”; musical comedy “Central Park,” and “Dickinson,” starring Oscar-winner Hailee Steinfeld.

Ampere said Amazon is focusing on drama for 29% of its originals compared to 17% for Netflix. It said YouTube and Facebook have upped scripted content, with YouTube focusing on youth-orientated comedy.

“They are shying away from reality content with just 6% of new commissions compared to 32% of their current catalog,” Cooper said.

 

Report: Netflix Subs Don’t Share Passwords Much

With Netflix having largest SVOD subscriber base in the United States and globally, conventional wisdom suggests the sharing of passwords among subs would be problematic.

Not so, according to new data from Ampere Analysis, which contends sharing of passwords among Netflix subs is less than 10%. The report found that password sharing among Netflix subs remains low globally — even in regions historically rampant in content piracy.

Ampere found that password sharing among Amazon Prime households (about 22% of U.S. households) greatly exceeds Netflix households (25%) — a factor the research firm attributed to Prime’s overarching ecommerce component.

In addition, the report found that a vast majority of Amazon Prime and Netflix households (97%) are not multi-user streaming video households.

“There is a widely-held belief that password sharing among Netflix homes is rife, but our data is telling a different story,” Guy Bisson, research director at Ampere, said in a statement.

Moving forward, it looks as if password sharing is a fact of life for SVOD players, with Amazon too suffering from account sharing for its Prime Video service.

Bisson said the 9% password sharing among Netflix households represents a revenue opportunity for the SVOD leader.

“Netflix has a potential revenue gain that can be switched on at will by locking down account sharing, but it’s more likely to be seen as an additional — and likely very effective — marketing and subscriber acquisition cost,” he said.

Netflix’s Other Achilles Heel: SAC

NEWS ANALYSIS – Netflix projects it will add 1.2 million domestic subscribers in the second quarter (ended June 30), which would give the SVOD pioneer nearly 58 million subs in the United States.

A conservative expectation – given Netflix’s market saturation – that will either be confirmed or denied July 16 when the service reports Q2 financial results. Netflix added 1.96 million subs in Q1 compared on a forecast of 1.45 million. Still, concern lingers among investors.

“Should domestic additions fall below last year’s 1.07 million level, we expect Netflix shares to decline,” Michael Pachter, media analyst at Wedbush Securities in Los Angles, wrote in a note. “Should guidance for Q3 net subscriber additions fall below last year’s Q3 additions (0.85 million domestic, and 4.45 million international), Netflix shares may react even more negatively.”

While missing its subscriber growth estimate would undoubtedly send Netflix bears and short sellers into a frenzy, a bigger concern is how much the service is spending acquiring new subs in the United States.

Netflix spent $228 million on domestic streaming in Q1, which was nearly double the $115 million spent in the previous-year period. That equals about $116 in subscriber acquisition cost (SAC) spent attracting each new domestic sub. Netflix spent about $81 for each new sub last year.

With the standard Netflix subscription plan costing $10.99 monthly, it will take the service more than 11 months to recoup the SAC spent acquiring each domestic sub in Q1. In other words, it is costing Netflix more to attract a dwindling new sub base.

By comparison, the service spent about $46 in marketing for each new subscriber outside the United States – up slightly from $44 spent during the previous-year period.

As many observers focus on sub growth, SAC and Netflix’s burgeoning content spend ($8 billion in 2018), the service’s free-cash-flow loss continues to grow exponentially as well. The company has projected a free-cash-flow deficit this year upwards of $4 billion – that’s on top of content spending!

“With declining domestic growth rates and spiraling acquisition costs, Netflix faces a very real set of challenges if it is to continue to command such a strong position,” Richard Broughton, research director at London-based Ampere Analysis, wrote in a note. “Our research shows that while Netflix can continue to enjoy relatively low acquisition costs for international subscribers and a buoyant market keen to embrace SVOD, it cannot afford to take its eye off the ball in the domestic market, even momentarily. Its ability to grow ARPU [average revenue per user] will be critically important to manage long term growth – domestically and abroad.”

 

Households Upping SVOD Services

NEWS ANALYSIS – One of the hallmarks of over-the-top video has been the distribution channel’s ability to offer myriad programming at loss-leader pricing.

Thus, it’s little surprise the average broadband home in the United States subscribes to 2.8 OTT services – spearheaded by Netflix, Amazon Prime Video and Hulu – according to new data from Ampere Analysis. The global average is two SVOD services per household.

Through the first quarter of the year, monthly domestic household SVOD spending reached $35 – more than double the $15.60 spent in the previous-year period.

With Netflix and Prime Video driving global SVOD growth, monthly household SVOD spending the United Kingdom reached $18.70 compared to $10.40 last year.

“Netflix and Amazon have acted as catalysts for SVOD stacking, particularly in those European markets where they have seized the initiative through low cost subscriptions,” Toby Holleran, senior analyst at Ampere Analysis, said in a statement.

Indeed, French and Spanish households now average 1.5 and two SVOD services per household, respectively, despite the recent exit of CanalPlay from the French market.

“While some European countries have been slower to adopt SVOD, the American giants are now part of the package in virtually every SVOD household,” said Holleran. “This is particularly notable in Holland, where nearly three in four SVOD households take only Netflix.”

Ampere contends that while OTT video continues to rise in popularity, demand for traditional pay-TV remains relatively strong in some countries. Household SVOD penetration in the U.K. increased 4%, while pay-TV adoption remained unchanged.

Indeed, in Poland where pay-TV is relatively inexpensive, OTT video continues to struggle gaining traction among consumers.

“Although in some cases a growing number of SVOD subscriptions is leading to a decline in pay-TV, that is certainly not always the case,” said Tony Maroulis, research manager at Ampere. “Heavy stackers are most likely to have pay-TV services. Clearly, there’s a healthy appetite amongst consumers worldwide for quality content across a range of paid-for platforms.”

 

Amazon Prime Video U.K. Grew Faster Than Netflix in 2017

Amazon Prime Video grew its subscriber base 11% in the United Kingdom in 2017, compared to 9% sub growth for rival Netflix, according to recent data from ratings firm Broadcasters’ Audience Research Board (BARB).

The firm said Prime Video ended the year with 4.3 million subs, compared to 8.1 million for Netflix. Prime Video ended 2016 with 3 million subs, compared to 6.5 million for Netflix.

Prime Video, which is included in the annual Prime membership, together with Netflix and Now TV accounted for 10.2 million combined subscribers – which trails multiplatform pay-TV operator Sky with 12 million subs.

Sky’s broadband-based Now TV has about 1.5 million subscribers.

Rick Broughton, analyst with Ampere Analysis in London, told The Guardian Prime Video has attracted subs by melding enhancements in ecommerce with upticks in original content spending on programs such as “The Grand Tour,” sports rights to ATP Tennis and future “Lord of the Rings” TV series.

“Amazon is making big strides to invest in content, but it is still not close to the extent of the Netflix originals slate and it doesn’t yet have the same brand perception for TV as Netflix does,” Broughton said. “If Amazon continue to invest at the rate they are … bundling it with the general attractiveness of Amazon Prime, there is a good chance they could catch up in the future.”

 

Pro Sports Using OTT Video to Target Younger Viewers

Formula 1 auto racing is a global brand generating more than $3 billion in revenue. It attracts an audience of 500 million people – largely older than Madison Avenue’s coveted 18-34-year-old demo. In the U.S., the rival to IndyCar remains a niche TV sport.

A survey by Ampere Analysis found just 6% of U.S. sports fans identify F1 as a sport they would watch on TV. Indeed, domestic viewers will rely on a repurposed feed from U.K. satellite TV operator Sky to watch any coverage of the 2018 FIA Formula 1 World Championship season.

F1 TV, the sport’s newly-launched over-the-top video service, is seeking to buck its older demo fan base by targeting younger viewers (under the age of 40) usually associated with streaming video.

London-based Ampere contends the $8-$12 monthly service – available in four languages (English, French, German and Spanish) and in nearly two dozen markets, including the U.S., will appeal to younger viewers because of the OTT element.

“As more sports become available OTT, it gives less popular leagues an opportunity to monetize markets where they are not mainstream enough to be attractive to a major broadcaster,” analyst Alexios Dimitropoulos wrote in a blog.

Even mainstream sports are taking the hint.

In the U.S., Major League Baseball, National Basketball Association, National Hockey League, Major League Soccer and World Wrestling Entertainment have launched OTT platforms — MLB with spectacular results.

The national pastime spearheaded the OTT movement among U.S. professional sports through its MLB Advanced Media division. The unit – which is co-owned by all 30 MLB franchises – recently sold backend digital tech subsidiary, BAMTech, to Disney in a deal worth more than $3.5 billion.

“Sports fans face a myriad of distractions and while commercial opportunities are still developing, it’s critical for rights owners to build their presence on social platforms to help maintain loyal audiences, support tune-in and provide a content experience which meets the needs of viewers who watch much less linear TV,” Gareth Capon, CEO at digital media aggregator Grabyo, told consulting firm KNect365.com.

Indeed, WWE, which makes millions marketing pay-per-view wrestling entertainment, generates significant ancillary revenue from WWE.tv, an OTT platform with almost 1.5 million subscribers.

“We expect more leagues and events to follow the same route … over the next few years,” said Dimitropoulos.

French SVOD/TVOD Use Increasing

French indifference toward subscription streaming video and transactional VOD appears to be waning.

About 20% of French broadband households used a SVOD service in the past year, with another 13% renting a transactional VOD movie – up from 11% from the previous-year period, according to new data from Médiamétrie.

By comparison, London-based Ampere Analysis in January found only 3.1% of French households used SVOD exclusively.

The average French household bought four videos, with households with children under 15 years of age consuming eight videos per year.

Paris-based Médiamétrie said that among SVOD users over the age of 15, episodic programing dominates. More than half (56%) of survey respondents said it was important to have French content.

The company found that on average three people in a household use a single SVOD account. The average user profile includes more women, with households often also subscribing to pay-TV rather than just broadband.

SVOD’s primary strength lies in diversity of content, with TV series (91%), movies (87%), cartoons (44%) and documentaries (40%).

Younger viewers (92%) watch several episodes in a row and 83% binge-view series. In total, the demo watches more than 11 series on average in a year, including more than seven that are available exclusively on a platform.

Médiamétrie said the demo rated episodic programing favorably (83%) due to numerous factors, including stopping-and-starting programing, multi-screen access and account sharing.

Among the top 10 streamed series, American content dominates despite increased desire among respondents to see more “Made in France” content. Indeed, 56% of respondents said it was important to have French movie and TV show productions.

While French households prefer streaming content via the TV, on average a transactional VOD user rents five times per year, mostly for movies. The latter still watches movies in theaters, in addition to watching video on the Web, DVD, DVR and pirated.