Survey: More Than 14% of U.S. Netflix Subscribers May Cancel It in Favor of Disney+

More than 14% of U.S. Netflix customers are considering ditching their subscription in favor of Disney+ when the new streaming service launches in November, which could amount to a loss of approximately 8.7 million subscribers for the streaming pioneer.

Those are the findings of a survey of more than 600 U.S. Netflix subscribers commissioned by Streaming Observer.

In the survey, 12.7% said they “might cancel Netflix” while 2.2% said they would “definitely cancel Netflix” and get Disney+.

Survey respondents with kids in their household were more than two times as likely to say they plan to cancel Netflix for Disney+.

Roughly two in five Netflix subscribers in the survey said they will try Disney+, which costs $6.99 per month ($69.99 per year), when it debuts. One-fifth of those surveyed said they plan on subscribing to both services, and 40% said they have no interest in Disney+.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Viacom Completes Pluto TV Acquisition

Viacom March 4 announced the completion of the acquisition of AVOD service Pluto TV.

The acquisition, for $340 million in cash, will advance Viacom’s strategic priorities while solidifying Pluto TV’s leadership in the domestic free streaming video market and accelerating its growth globally, according to a Viacom press release.

Pluto TV will operate as an independent subsidiary of Viacom, led by President and CEO Tom Ryan.

Subscribe HERE to our FREE daily newsletter!

“The completion of this deal marks an exciting next step in Viacom’s evolution and a powerful opportunity for us to extend our consumer reach and broaden our ability to add value across the industry as the media landscape continues to segment,” said Bob Bakish, Viacom president and CEO, in a statement. “Together with Pluto TV, we look forward to becoming a stronger partner to distributors, advertisers, content providers and audiences around the world.”

Founded in 2013, Pluto TV streams more than 100 channels and thousands of hours of on-demand content spanning television and movies, sports, news, lifestyle, comedy, cartoons, gaming and trending digital series. It has more than 12 million monthly active users across devices, including smart TVs, streaming players, mobile devices, desktops and gaming consoles, according to the release.

“Pluto TV will have a crucial role in expanding Viacom’s presence across next-generation distribution platforms as a standalone free over-the-top (“OTT”) product, a direct-to-consumer cornerstone, and a partnership solution for wired, mobile and OTT distributors to serve their broadband only and video bundle subscribers on a zero incremental cost basis,” stated the release.

Pluto TV also benefits Viacom’s advanced marketing solutions (“AMS”) business, serving as a source of targeted inventory — particularly for younger demographics — thereby strengthening Viacom’s ability to serve advertising customers and their associated agencies, the release stated.

Disney’s Direct-to-Consumer Biz Widens Q1 Operating Loss

Disney CEO Bob Iger says over-the-top video is the media giant’s future and No. 1 goal in 2019.

That future is expensive, too.

Disney Feb. 5 reported that first-quarter (ended Dec. 29, 2018) operating losses from the direct-to-consumer & international segment increased from $42 million in the previous-year period to $136 million. Revenue decreased 1% to $918 million from $931 million. The dip reflected a 4% decrease from an unfavorable foreign currency impact.

The increase in operating loss was due to the ongoing investment ramp-up in ESPN+, which launched last April and has about 2 million subscribers, a loss from streaming technology services and costs associated with the upcoming Q4 launch of Disney+, partially offset by an increase at the company’s international channels and a lower equity loss from its investment in Hulu.

Increased revenue at international channels was due to lower costs, affiliate revenue growth and higher program sales, partially offset by an unfavorable foreign currency impact.

Results for Hulu, which is co-owned by Disney, Fox, Comcast and WarnerMedia, reflected increases in subscription and advertising revenue, partially offset by higher programming costs. The service has more than 25 million subscribers.

“We look forward to the transformative year ahead, including the successful completion of our 21st Century Fox acquisition and the launch of our Disney+ streaming service,” Iger said in a statement. “Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space.”

Research: U.S. Broadband-Only Households to Grow to 40.8 Million by 2023

Broadband-only U.S. households are set to grow from 23.3 million in 2018 to 40.8 million by 2023, according to estimates from Kagan, a media research group within S&P Global Market Intelligence.

“The steep upward trend of due to ‘cord-cutting’ is not surprising given the abundance of online video services on the market, although this could be a circular argument, with more companies jumping on the streaming video bandwagon in response to the growing broadband-only market,” said Tony Lenoir, senior Kagan research analyst at S&P Global Market Intelligence, in a statement.

Kagan expects the segment of broadband homes without a traditional multichannel subscription to account for nearly one-third of U.S. households in the next five years.

Kagan findings show that over-the-top (OTT) products, whether subscription video on demand, direct-to-consumer or virtual multichannel, are offered at competitive prices which is a major factor fueling cord-cutting. Other reasons for the strong projection of broadband-only growth include the ease of joining and cancelling online streaming services, Kagan found. They typically do not require contracts.

“The value proposition of streaming video services touches a chord with the average consumer,” Lenoir said in a statement. “The vast majority of streaming services offer free trial periods, effectively allowing consumers to shop around while bypassing hardware hassles associated with legacy video distribution. This coupled with the fact that streaming services are typically screen-agnostic and seamlessly portable, offer individual, customized consumption for customers.”

Additional findings include:

  • Kagan expects broadband-only homes, or households without a traditional multichannel video package, but a subscription to wireline broadband, to rise at an 11.9% compound annual growth rate from 2018 to 2023.
  • Broadband-only homes are set to account for 41.7% of wireline broadband households by 2023. Kagan expects cable and telco broadband to serve nearly 75% of U.S. households by that time.

Amazon Channels Driving OTT Video Subs as Apple Eyes Market Entry

Amazon Channels, the ecommerce behemoth’s platform selling Prime members access to third-party over-the-top video services, now accounts for 55% all SVOD purchases, according to new data from The Diffusion Group.

The firm found that Amazon Channels was responsible for 70% of a-la-carte sign-ups for Lionsgate-owned Starz and CBS-owned Showtime OTT, among others.

Amazon, which has more than 100 million Prime members globally, shrewdly gets a percentage of revenue subscriptions, including subscriber data, while third-party OTT services shoulder costs for hosting, streaming and customer support.

Media reports suggest about 18% of the U.S. population uses Amazon.

“While Prime Video continues to receive the lion’s share of attention from industry media, Amazon has quietly built a stronghold in the burgeoning direct-to-consumer video market,” Michael Greeson, president of TDG, said in a statement.

And Apple has taken note. The tech giant plans to incorporate a new feature in the app embedded in Apple TV, iPhone and iPad that would afford users access to third-party OTT video apps (with separate subscriptions).

TDG contends this could be a game changer since direct-to-consumer video platform subscriptions are projected to increase 400% over the next five years.

At the same time, only 8% of iTunes transactions involve renting or buying videos, according to Screen Media, with Apple TV generating about 15% market share in the streaming media device ecosystem.

“Apple would have a key advantage over Amazon Channels: it would not require a $120/year membership before [a consumer] can aggregate a-la-carte purchases through its TV app,” Greeson said.

 

WarnerMedia Boss Looking for Larger OTT Video Audience

Size matters to WarnerMedia CEO John Stankey. The new boss at the former Time Warner (Turner, HBO and Warner Bros.) wants to bring scale to WarnerMedia’s slate of pending and existing direct-to-consumer platforms.

And that begins with HBO. As has been previously reported, Stankey seeks to up the premium channel’s original content slate through increased spending and year-round releases.

“My goal is to give the HBO team the resources to greenlight additional projects already in the development funnel,” Stankey said on the July 24 fiscal call. “That would keep consumers from jumping in-and-out of [HBO Now]. If we can smooth [program] scheduling, then we drive down churn, improve retention and subscriber growth.”

Second-quarter (ended June 30) operating income at HBO remained essentially flat at $530 million. Growth in revenue was offset by increased expenses, including programming and marketing costs. Programming expenses increased 15% due to higher original and acquired programming costs. The increase in marketing costs was related to original programming. Operating income included $39 million of costs related to the AT&T merger.

AT&T CEO Randall Stephenson said traditional and new-age media companies are all pursuing the same goal of selling directly to consumers.

“The modern media company must develop extensive direct-to-consumer relationships,” he said. “And we think pure wholesale business models for media companies will be really tough to sustain over time. The recent valuations of media companies are reinforcing this point.”

Both Stephenson and Stankey contend bundling WarnerMedia brands is the best way to bring larger audiences to individual OTT platforms. AT&T has about 170 million customers across its various distribution channels, including mobile, satellite, broadband and telecom.

“If you put CNN.com, Otter Media (which AT&T co-owns with The Chernin Group) and Bleacher Report together, there are almost 200 million unique monthly users to each of those sites,” Stephenson said. “This is a scaled direct-to-consumer business.”

The CEO believes that personalizing content and advertising through OTT video will create “unique” consumer experiences.

“It’s pretty exciting,” Stephenson said.

Stankey said that since the close of the $85 billion Time Warner acquisition, corporate has been busy with the “blocking and tackling” that comes with a merger, including integrating corporate and staff functions, and aligning corporate management as part of $2.5 billion in group synergies.

The executive wants to expand audiences for OTT ventures, including HBO Now and recently launched DC Universe platform.

“They’re all good within their own right, [but] they generate what I would consider to be small-scale audiences,” Stankey said. “A company our size, we want to be generating audiences in the tens of millions. Not in the single-digit millions.”

The executive believes WarnerMedia’s strong brands are more powerful when bundled together than as stand-alone properties.

“So, over time we are going to think about how the discreet brands we have [can be unified] into a more consistent, more-focused experience,” he said. “That starts to bring some scale.”