Ampere: U.S. Subscription Streaming Video Growth Resumes

Netflix subscriber growth in the United States may be slowing, but the domestic market for subscription streaming video is poised for expansion, according to new data from Ampere Analysis.

The London-based research group said growth in SVOD subscriptions in the U.S. resumed after peaking from Q3 2016 and Q1 2018.

Much of that renewed growth has come from Hulu topping 25 million subscribers earlier this year, in addition to pending service launches from Disney, Apple, WarnerMedia and NBC Universal.

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Although the proportion of Internet users in Europe who have a SVOD subscription is lower than in the U.S., there continues to be healthy sub growth across the Atlantic.

“The growth in SVOD subscribers in both regions will come as welcome news, particularly to those looking to enter the market this year such as Disney and Apple as it shows there is still room for growth and the opportunity to take a share of the revenue,” Minal Modha, consumer research lead at Ampere, said in a statement.

Indeed, about 80% of Internet users in Saudi Arabia and the U.S. have at least one SVOD subscription. Japan and France are the only countries where fewer than 50% have a subscription.

Subscriptions are being driven by younger demographics, with those under 35 over-indexing in each market except Saudi Arabia where it is driven by those aged 45 years and over.

All but two markets analyzed enjoyed subscriber growth between Q3 2018 and Q1 2019, with Saudi Arabia (+8.1%), Australia (+6.8%) and Denmark (+6.3%) spearheading expansion.

The Netherlands and Japan are the only markets where subscriber growth has stagnated since Q3 2018.

Roku Remains Top Streaming Media Device in U.S.

Roku’s streaming TV platform accounted for more than 30% of U.S. sales of connected TV devices in Q1 2019, further increasing its lead in streaming TV platforms, according to the latest data from Strategy Analytics.

The British research firm finds that there are more than 41 million Roku-based devices in use, including branded set-top devices, HDMI sticks and smart TVs, accounting for 15.2% of all media streaming devices.

Roku now has a 36% lead over the next major platform, Sony PlayStation, in terms of devices in use. The report predicts that this lead will stretch to 70% by the end of the year, largely as a result of the success of Roku’s smart TV partner strategy.

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Other key findings from the report include:

Amazon’s Fire TV OS was the second-most-sold streaming TV platform in Q1 2019, with 12% of sales, followed by Samsung’s Tizen at 11% and Google (Android TV and Chromecast) at 9%

By the end of 2019 more than 52 million Roku-powered devices will be in use, accounting for 18% of all connected media devices

“Roku had another strong quarter in Q1 and continues to hold a commanding lead in streaming media platforms in spite of Amazon’s growing influence in the living room,” David Watkins, director at Strategy Analytics and the report’s author, said in a statement.

Watkins said Roku’s firs-mover status (it co-pioneered subscription VOD with Netflix), content offering of third-party streaming services, comprehensive search function and simple and intuitive user interface have contributed in its success.

The analyst cautioned Roku is less well-known outside of the U.S. and to succeed on the international stage would need to “face down” the challenges of building brand awareness and drawing users away from well-established players such as Amazon, Apple and Google.

“There was record growth in the smart TV market in the first quarter of 2019 and Roku and TCL have proved to be a great partnership in this rapidly growing segment,” added David Mercer, principal analyst at Strategy Analytics. “Roku is set to become the U.S.’s top smart TV platform this year in terms of sales share, and Google and Amazon clearly have their work cut out to stay in touch with the market leader.”

Report: Apple to End iTunes

Apple is planning to unveil new apps and the roadmap to end iTunes June 3 at the Worldwide Developers Conference in San Jose, Calif., according to a report from Bloomberg.

Three new apps for Mac will be introduced — Music, TV and Podcasts — to match the format already employed on iPhones and iPads, according to the report from Mark Gurman.

Since its beginning with music, iTunes has branched into video and podcasts, prompting some to call it unwieldy.

Apple also is planning a new streaming service Apple TV+, announced March 25, with the backing of big Hollywood names. The service is scheduled to debut this fall. No pricing has yet been announced.

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Business Insider reported that Facebook and Instagram pages for iTunes were scrubbed on Saturday, citing a Mac Rumors report that said the content was scrubbed over the last 48 hours “since cached versions of the accounts still show posts, photos, and videos as of May 31. Content from the iTunes Facebook and Instagram pages have been moved over to newer pages for Apple TV.”

The apparent death of iTunes, however, doesn’t mean Apple is no longer selling or renting movies digitally. In the Apple TV app, users can buy or rent movies, buy episodes or seasons of TV shows, and subscribe to Apple TV channels to stream or download movies or TV shows.

 

Apple Ups Q2 ‘Services’ Revenue to Record $11.5 Billion

Apple April 30 reported record “services” revenue of $11.5 billion, up more than 16% from revenue of $9.13 billion during the previous-year period.

As the media/tech giant shifts its focus from hardware products such as iPhone, iPad, Mac and Apple Watch, among others, it has upped scrutiny on services, which include sales of digital movies and TV shows on iTunes and Apple TV, in addition to the pending rollout of Apple TV+ app and separate subscription streaming video service.

“Our March quarter [services] results show the continued strength of our installed base of over 1.4 billion active devices,” CEO Tim Cook said in a statement.

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Cook eyes Apple’s install base as the genesis for the future success of AppleTV+ and related Apple business ventures such as Apple News, Apple Pay (including branded credit card), Apple Arcade (gaming) and Apple Music.

Indeed, Apple said sales of its legacy iPhone declined nearly 18% to $31 billion from $37.5 billion during the previous-year period. The attributed the decline to 21.5% drop in unit sales in China – a slight improvement from 26.7% unit drop in the prior-year quarter.

Mac revenue dipped 4% to $5.5 billion, while iPad sales revenue increased 21.5% to $4.8 billion.

Net revenue fell about 5% to $58 billion from $61.1 billion. Net income fell almost 17% to $11.5 billion from $13.8 billion.

European Union Launching Movie VOD Platform Similar to ‘Movies Anywhere’ in the U.S.

The European Union is launching a platform aimed at informing consumers where they can access more than 35,000 European-produced movies on-demand across more than 150 video-on-demand services, including Netflix and Amazon Prime Video.

Dubbed “Lumiere VOD,” the platform — currently in beta rollout — is designed to support European films and filmmakers after an internal study found just 29% of feature films offered on VOD services originate from European countries.

By comparison, European VOD services feature about 50% movies originating from Hollywood studios, according to the EU.

VOD services financially backing Lumiere include Prime Video, Ampere Analysis, Apple, CNC, EuroVOD, FilmDoo, Filmin, Filmtoro JustWatch, Kino Fondas, La Cinetek, La Pantalla Digital, Le Kino.ch, Mediathèque Numérique, Netflix, realeyz, uncut, UniversCiné, VOD Club, VOD.lu and Vodeville.

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Lumiere VOD is similar to Movies Anywhere in the United States, which offers consumers a landing platform for third-party digital services selling digital movies, including iTunes, Prime Video, Vudu, Xinfity, Google Play, Microsoft Movies & TV and FandangoNow.

The EU previously passed a mandate that all streaming and VOD services operating within its jurisdiction include at least 30% localized content.

At the same time, the economic organization cited scant availability of databases promoting European movies available on VOD, despite the fact the region produced more than 18,000 films from 2007 to 2016, including 47% increase in global production in 2017.

With Digital TV Research projecting an increase of 409 million VOD subscribers by 2023 to 777 million globally, the EU decided to act.

“Europe is a major player in film production therefore we must ensure that European films and other audiovisual works attract the audience that they deserve,” Mariya Gabriel, commissioner for digital economy and society, said in a statement. “This is yet another important initiative aimed to ensure that European works of art and cultural heritage stay high on the political agenda.”

Lumiere VOD is slated to launch publicly at the end of the year.

Poll: Netflix ‘Integral Part’ of People’s Lives

Heading into Netflix’s first-quarter (ended March 31) fiscal results release, new research from The Harris Poll found that 86% of respondents stream the SVOD pioneer, followed by Hulu (53%) and Amazon Prime Video (49%).

The survey, commissioned by ad-exchange OpenX, found that despite Netflix’s recent price hike, the average amount subscribers would pay monthly for a single OTT service subscription is $22 — which is 37.5% more than Netflix’s most-expensive $15.99 plan.

Indeed, the poll found Netflix has become an integral part of people’s lives, with half of users also subscribing to Hulu (52%), Prime Video (54%), YouTube TV (29%) and HBO Now (24%).

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Notably, 31% of respondents would watch ads on Netflix for a lower monthly subscription price; while 24% would watch ads on Netflix, but only if the service was free.

“It will be telling to see if Netflix’s growth numbers are adversely impacted by the price hike; especially now that Disney+ will be significantly undercutting Netflix on price,” Dallas Lawrence, chief brand officer at OpenX, said in a statement.“According to our data, Netflix users are too loyal to leave over a few dollars cost increase.”

Indeed, the poll found Netflix replaces the need for cable/satellite TV for about half (47%) of respondents; with 46% planning to keep their cable/satellite TV package in addition to Netflix.

“Recent announcements by Apple and Disney signify Netflix’s reign as the undisputed king of streaming services may be coming to an end,” said Lawrence. “It’s early in this massive shift of consumer attention from linear TV to OTT to make any calls just yet. As the percentage of Americans who stream content gets closer to 100% [from current 50%], there’s still growth potential for Netflix in the U.S.”

Report: 83% of U.S. Teens Own an iPhone

With Apple prepping to launch its rebooted Apple TV+ streaming platform, new data from Piper Jaffray found that 83% of teen survey respondents in the United States own an iPhone.

The survey of 8,000 teens skewed 54% male with an average age of 16.3 years. Notably, 86% of respondents said they would choose an iPhone for their next mobile phone – up from 75% in a spring 2016 survey.

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The data suggests teens would continue use the iPhone as adults, with usage expanding to Apple Music, AirPods, Apple TV+ and Apple Watch.

Indeed, Piper found that 27% of teens own a smartwatch, with another 22% planning to buy one in the next six months. That’s up from 20% in the same survey a year ago.

Netflix Rated the Fastest-Growing Brand in 2019

As if it needs more attention, Netflix has been tapped the fastest-growing brand of 2019, according to Brand Finance, a brand valuation consulting company based in New York and Paris.

Based in part on a company’s ability to remain relevant and make an impact on the culture (home entertainment) it’s participating in, Netflix saw its brand value increase 105% over the past year to $21.2 billion.

The report said the subscription streaming video pioneer is set to play the “lead role in home entertainment,” building a disruptive business model as a universally accessible narrowcaster and effectively challenging traditional broadcasting brands and distribution.

“Netflix delivers high-quality and varied programming to anyone with Internet access and a credit card,” Alex Haigh, valuation director at Brand Finance, said in a statement. “The platform has embarked on a disruptive approach to media services and now has incumbents in the market looking over their shoulder.”

While Netflix’s brand keeps growing exponentially, Amazon (including Prime Video) remains the most valuable domestic brand, growing nearly 25% to $187.9 billion valuation.

“This year, Amazon’s brand is worth approximately half of the combined value of the 42 retail brands in the ranking,” Haigh said. “The retail industry is another sector at a crossroads as tech giants and online sellers encroach upon the traditional business model with a completely new proposition.”

With the media industry feeling the effects of tech disruption, another rapidly growing digital media brand is YouTube(up 46% to $37.8 billion) this year jumping 10 spots to 13th nationally.

Like Netflix, YouTube is building a broad platform for video content, in an effort to leverage its brand from merely peer-to-peer video creation and sharing to also include a growing premium and professional video library.

Among traditional media brands, Disney entered the top 10 nationally on the back of its M&A acquisition of 20th Century Fox Film Corp. The brand jumped 40% in value to $45.7 billion.

Tech giants, Apple (2nd, $153.6 billion) and Google (3rd, $142.8 billion) remained entrenched in their positions from last year.

With a 47% increase in brand value to $119.6 billion, Microsoft moved into 4th after the company’s successful turn towards a cloud-centric business.

With all eyes turned to 5G, AT&T dropped down a spot to 5th, after a modest 6% brand value increase over past 12 months to $87 billion.

Aside from calculating brand value, Brand Finance also determined the relative strength of brands using a scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance.

Though Facebook held onto its 6thspot, its brand strength suffered the second worst decline among the top 100 brands, resulting in a rating downgrade from AAA+ to AAA- after a year of privacy issues that have landed the company in the hot seat.

Behind tech, the largest industry with a combined brand value of over $1 trillion, the retail sector comes in second with $340.5 billion. Eighth-ranked Walmart (up 10% to $67.9 billion) is the nation’s most valuable brick-and-mortar retail brand, as it continues to push the boundaries of its physical store and logistics network.

Home Depot (up 39% to $47.1 billion) jumped from 11th to 9th, while its rival Lowe’s saw its brand value go up 49% to $23.9 billion.

Analysts Split on Apple’s Streaming Impact on Netflix

The day after Apple’s media coup announcing plans for an enhanced Apple TV app and related services, Wall Street appears divided depending upon which side of the Netflix stock it sits.

With more than 1.4 billion iOS connections globally, the revamped Apple TV+ service would appear to be a major competitive threat to Netflix’s global base of nearly 150 million subscribers and future growth.

With a history of industry disruption and creating consumer markets through iTunes, the iPhone, iPad and Apple Watch, conventional wisdom suggests Cupertino, Calif.-based Apple could upend Netflix’s burgeoning growth and market dominance — despite its relatively late entry into the over-the-top video ecosystem.

Needham analyst Laura Martin contends Apple TV+ could be “poison” to Netflix by virtue of Apple’s 900 million existing connected consumers and its ability going forward to bundle original content, discounted third-party OTT services, music and video games.

In a note, Martin writes that if Apple is successful converting just 10% of its unique users to Apple TV+, it would be able to fund content with a budget nearly triple Netflix’s. The analyst is also bullish on Disney’s pending Disney+ streaming service, telling media it could generate 50 million subs.

Dan Ives, media analyst with Wedbush Securities, says Apple is separating itself from Netflix by catering to family-friendly content on a secure platform.

“[Apple] is trying to differentiate itself [from] competitors and flex its Apple brand muscles to get more consumers on this ‘trustworthy’ platform,” Ives wrote. “We continue to believe the company has the opportunity of capturing 100 million consumers on this streaming service over the next three-to-five years.”

On the flipside, Raymond James analyst Justin Patterson says Netflix market position is well-built to withstand the threat.

“Similar offerings already exist, suggesting this service is more incremental than revolutionary,” Patterson wrote in a note. “We believe Apple’s and Disney’s launches will not adversely affect Netflix’s competitive position.”

Longtime Netflix bear Michael Pachter, with Wedbush Securities, says that with Apple reportedly spending $2 billion on original content, including licensing content from Netflix’ studio contributors – in addition to offering third-party OTT services — the SVOD pioneer will have increased challenges finding compelling content to justify its standalone service.

“We expect Netflix to suffer the double whammy of seeing existing content migrate to competitive services at the same time that new domestic subscribers are more difficult to attract,” Pachter wrote in a March 26 note.

 

 

Stars Bite on Apple Streaming Service

Stars and filmmakers from Steven Spielberg and J.J. Abrams to Steve Carell, Jennifer Aniston, Reese Witherspoon and Oprah turned out March 25 to help Apple launch it’s new streaming service Apple TV+.