Analyst: Pay-TV Cord-Cutting Increasing

While cord-cutting among linear pay-TV households isn’t new, the pace of disruption is. New data from eMarketers found that U.S. pay-TV households dropping service will increase 7.5% in 2020, resulting in a market size of 77.6 million households. Previous data had pay-TV households dropping to 80.5 million. The data excludes online TV services such as Sling TV, AT&T TV, Philo and YouTube TV, among others.

The firm estimates that the number of households dropping pay-TV service combined with households that have never had a subscription, will increase to 51.7 million from 48.9 million.

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“The pandemic increased pay-TV losses because it tightened consumers’ wallets and caused the cancellation of live sporting events, which are one of the main draws of cable and satellite operators,” Ross Benes with eMarketer wrote in the report. “Pay-TV providers have also cut back on some of their promotional pricing to sustain profitability. But as prices increased, so did cord-cutting.”

Benes found that when including online TV with pay-TV, household declines looked “slightly less dire.” This year, 86.1 million U.S. households will have pay TV/online TV, a 5.9% year-over-year decrease, which translates to 66% of households having combined service.

2020 will end with 10 million U.S. households having online TV service, up from 9.5 million in 2019. When these products first launched several years ago, they were sold at a discount to attract new customers. But with TV affiliate fees growing, online TV prices have significantly increased, eroding one of their main advantages over traditional TV, according to Benes.

He wrote that while adding or dropping online TV service is much easier than traditional pay-TV, eroding price advantages between the two is hurting online TV market growth.

“When analyzed this way, the number of cord-cutters and cord-nevers combined will not surpass the number of pay-TV/online TV viewers this year,” Benes wrote. “However, their paths are converging, and most of the customers leaving traditional TV are not replacing it with online TV.”

Analyst: Spain to Top 20 Million OTT Video Subs by Next Year — Driven by Netflix

Spain is quietly emerging as a major market for over-the-top video distribution, driven by Netflix, HBO España and Amazon Studios. New data from eMarketer suggests the country will top 20 million OTT subs next year — or about 40.1% of the country’s population.

Indeed, Netflix began producing original content in Spain in 2016 and opened its first European production hub in Madrid in spring of 2019. A trend replicated by ViacomCBS and Spain-based broadcaster Astresmedia and telecom giants Orange and Telefónica — the latter via its streaming video service Movistar.

Though Netflix will boast the largest user base in Spain, its 70% market share of subscription OTT video subs is actually lower than in other major markets. In Germany, Netflix claims 77.1% of the SVOD market, and 80% in Denmark, France, and the U.K. The report suggests a wider variety of SVOD services in Spain undermines Netflix’s domination.

“[Subscriber] growth should slow down in H2 2020, so Netflix must continue to work hard and fend off competition from emerging platforms like Disney+, HBO Max, and even Amazon Prime Video,” Matteo Ceurvels, eMarketer research analyst covering Latin America and Spain at Insider Intelligence, said in a statement. “Though competition abounds, we still view the subscription OTT landscape as a story of ‘Netflix versus the rest.'”

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Analyst: Pay-TV to Lose 50% of U.S. Subs by 2024

Cord-cutting among pay-TV households in the United States is real and growing — even during a pandemic. New data from eMarketers finds that 33% of all domestic pay-TV homes will cut the cord by 2024 — with 31.2 million households dropping either cable, satellite or telecom service this year. And 6.6 million households will cancel their pay-TV subscriptions.

“Consumers are choosing to cut the cord because of high prices, especially compared with streaming video alternatives, analyst Eric Haggstrom said in a statement. “The loss of live sports in [the first half of the year] contributed to further declines. While sports have returned, people will not return to their old cable or satellite plans.”

The ongoing secular shift toward over-the-top video leaves about 77.6 million domestic households with cable, satellite, or telecom TV in 2020, down 7.5% year-over-year and the biggest drop ever, according to eMarketer. The tally is down 22.8% from pay-TV’s peak in 2014. By the end of 2024, fewer than half of U.S. households will subscribe to a pay-TV service.

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The loss of viewers is having a major hit to traditional TV ad spending. Total spend will drop 15% this year to $60 billion, the lowest the industry has seen since 2011.  And while it will rebound some next year, eMarketer contends TV ad spending will remain below pre-pandemic levels through at least 2024.

Analyst: Disney+ Viewership Set to Pass Hulu by 2024

Disney’s direct-to-consumer streaming video service continues to impress analysts. New data from eMarketer suggests the $6.99 monthly platform will have 72.4 million viewers in the United States by the end of the year — representing 32.1% of the country’s SVOD viewership.

Disney+ is projected to have annual double-digit viewership growth through 2024, topping sister service Hulu, with 123.4 million viewers compared with 115.6 million for Hulu. Disney+ viewership now dwarfs rival Apple TV+ (18.8 million) — despite launching a week later in 2019.

Disney currently has nearly 35 million domestic subscribers. The eMarketer viewership estimates outpace subscriber totals because multiple viewers can use the same subscription.

In 2020, 225.4 million viewers will use a streaming service at least once per month, up from the 221.9 million viewers previously forecast in Q1. This figure will grow to 237.1 million in 2024. Netflix remains the top subscription streaming service in the U.S., with 168.9 million viewers, followed by Amazon Prime Video at 130.1 million.
“Since its launch, Disney+ has been able to grow quickly by using a low price point and leveraging a vast library of content,” Eric Haggstrom, forecasting analyst at Insider Intelligence, said in a statement. “Bundled offerings with Hulu and ESPN+, as well as distribution deals with Verizon, have enabled it to grow new subscriptions quickly and reduce subscriber churn.”
Haggstrom added that while Disney+ has benefited from lockdowns and stay-at-home orders during the coronavirus pandemic, movie and TV production shutdowns could pose challenges in retaining subscribers looking for new content.
“It will be difficult for Disney+ to continue growing viewership in 2021 with a light batch of new releases,” he said.

Reports: AVOD Revenue to Grow 25% in 2020

Subscription streaming video’s counterpart, advertising-supported VOD, continues to gain traction among consumers — and advertisers. New data from eMarketer suggests AVOD revenue will grow more than 25% this year compared to 2019.

The AVOD market, which is spearheaded by The Roku Channel, Disney-owned Hulu, NBCUniversal’s Peacock, Redbox TV, Amazon’s IMDb TV, ViacomCBS’s Pluto TV and Fox Corp.’s Tubi, among others, saw ad revenue skyrocket 31% to $849 million in the most-recent quarter, according to MoffettNathanson Research.

“AVOD advertising benefitted from heightened usage and a mix shift in advertising budgets to OTT platforms, growing sizably in the quarter,” senior analyst Michael Nathanson wrote in a note.

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Speaking Aug. 20 on the DEG: The Digital Entertainment Group Mid-Year 2020 Digital Media Entertainment Report webcast, Nathanson called AVOD the underreported streaming video story.

“That 28% of streaming minutes is where we think the streaming wars are actually happening,” Nathanson said.

With many of the AVOD players owned by major media companies, much of the ad growth would appear to be due to shifting third-party ad dollars from linear TV to connected televisions.

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But with four of the five AVOD platforms owned by major media conglomerates, some of this growth is likely coming from reallocated TV spend. eMarketer contends the 31% rise in AVOD revenue among the top platforms compares with an estimated 28% decline in national broadcast and cable TV ad spending in Q2, according to Nathanson.

Eric Haggstrom, forecasting analyst at Insider Intelligence at eMarketer, believes that while marketers warm to AVOD, much of the revenue revolves around media giants pushing advertisers to proprietary streaming platforms.

“Some advertisers who bought ads in the upfronts are shifting money within the same media company to streaming services,” Haggstrom said.

Indeed, Tubi earlier this year added all episodes of Fox’s “Gordon Ramsay’s 24 Hours to Hell and Back,” in addition to 300 hours of separate Ramsay content, which includes “Hell’s Kitchen,” “Kitchen Nightmares” and “The F Word.” Tubi also added Fox’s music competition show “The Masked Singer.”

“Making this show available on Tubi alongside Gordon’s other series, will only grow his footprint while also further promoting his programs on Fox,” said Rob Wade, president of alternative entertainment and specials at Fox Entertainment.

Report: Baby Boomers Slow to Adopt New Technology

Baby boomers, by conventional wisdom, are not entirely nondigital ⁠— they were, after all, the pioneers of adopting home computers — but at this point in their lives, they’re a bit more reluctant about adopting newer technologies.

That’s the genesis of a new eMarketer report that found increased use of voice assistants and smart-home devices has largely skipped consumers born between 1946 and 1964.

The report’s author, Mark Dolliver, writes that along with concerns about privacy, lagging tech adoption among boomers relates to ongoing indifference regarding adoption of new things.

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eMarketer cited a surge in voice-activated technology, which Dolliver said ought to have appeal for older boomers, whose ability to read a small screen and manipulate a tiny virtual keyboard may be declining. Yet boomers who own smartphones have lagged in using the voice assistant functions on devices.

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“We estimate that 38.6% of smartphone boomers will use the voice assistant this year, vs. 49.0% of Gen Xers and 53.1% of millennials,” Dolliver wrote.

The report also claims boomers have scant adoption of smart-home technology, such as monitoring devices, Internet-connected home thermostats and smart appliances. According to a September 2019 AARP survey, penetration of such devices was lowest among the oldest boomers (who might benefit from them most) — falling from 11% among 50- to 59-year-olds, to 10% among 60- to 69-year-olds and to 7% among those ages 70 and older. Boomers also lag in adopting smart speakers, which bump up against their chronic worry about digital privacy.

“We expect just 17.6% of boomers to own smart speakers this year, barely half the device’s penetration among Gen Xers,” Dolliver wrote.

When boomers and seniors do try a new technology and find practical benefit in it, they’re like to stick with it, according to Dr. Alison Bryant, SVP of research at AARP.

“They may not literally be the first kid on the block to adopt it,” Bryant said. “But once they do, they will use it if it’s of value to them. And they have the discretionary income to actually purchase it.”

Report: U.S. E-commerce Will Rise 18% in 2020 Due to Pandemic

The COVID-19 pandemic is fueling online sales, according to new data from eMarketer.

The research firm predicts a 10.5% decline in total U.S. retail sales this year, with a 14% drop in brick-and-mortar sales. In February, the research firm projected growth of 2.8% to $5.6 trillion in total domestic retail sales.

The one bright spot: E-commerce is set to grow 18% this year following a 14.9% uptick in 2019.

“E-commerce sales have been driven by a surge in click-and-collect, specifically curbside pickup, allowing U.S. consumers to make immediate purchases while minimizing human contact,” Alexandra Samet with eMarketer wrote in a post. “We now expect U.S. click-and-collect e-commerce sales to grow to $58.52 billion, up 60.4% from our initial forecast of 38.6% growth.”

Samet said the 18% growth forecast for e-commerce reflects a notable increase in both the number of digital buyers and the average spending per buyer. She said the gains reflect the pandemic’s impact on new buyers joining the online retail space, including 12.2% growth for those ages 65 and older.

“In a pandemic economy, consumers have gravitated toward trusted and reliable retailers,” Samet wrote. “As a result, we can expect the top 10 e-commerce retail businesses [i.e. Amazon, Walmart] to grow at above average rates (21.8%).

Some of the extreme channel-shifting in Q2 2020 will subside over the course of the year as stores reopen and lockdowns end countrywide, according to eMarketer. However, certain behaviors like click-and-collect and curbside pickup will persist, indicating a long-term trajectory of e-commerce growth.

“Walmart’s accelerating e-commerce growth will take it to the No. 2 position for the first time,” Samet wrote.

eMarketer: 5 Million New Online Shoppers Due to COVID-19

Throughout the coronavirus pandemic, e-commerce has seen an uptick as traditional retail shuttered or reduced normal operations to help curb the spread of the virus.

New data from eMarketer estimates that more than 204 million people ages 14 and older will make an online purchase in 2020 — two-thirds of which will be 45 and older. The updated forecast, which factors in the pandemic’s effects, anticipates a 5.8% increase in the number of digital buyers 45 and older, up from 3.2%. This equates to nearly 5 million new users.

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In separate surveys conducted Feb. 28 and March 17, baby boomers said they had shifted their shopping to online in the three-week span. In the March poll, roughly 23% of boomers said they had been shopping more online due to the pandemic, considerably more than the 8% of respondents in February.

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In a separate Salesforce survey during the first two weeks of May, 28% of baby boomers said they had used contactless delivery more than usual, followed by self-checkout options (23%) and click-and-collect (23%).

And an April 2020 GlobalWebIndex study found that 31% of U.S. Internet users ages 16 to 64 said they will shop online more frequently after the pandemic ends, and 30% expect to visit stores less frequently.

“While we expect some shopping habits to return to normal post-pandemic, it’s likely that consumers who have tried online shopping for the first time will stick with it, at least for occasional purchases,” Cindy Liu, author of the report, wrote in an online post.

Report: Average Daily SVOD Consumption Tops 1 Hour

The average time spent with subscription OTT video content in the U.S. will surpass 62 minutes per day this year, up 23% from 2019 and 38% since 2018, according to new data from eMarketer.

The research firm contends a plethora of new streaming platforms, including Disney+, NBCUniversal’s Peacock, Quibi, Apple TV+ and HBO Max (WarnerMedia), have accelerated home entertainment options for people spending greater percentage of their time in the home due to the coronavirus pandemic.

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The average time spent with Netflix domestically will surpass 30 minutes per day, up more than 16% from 2019. Amazon Prime Video, the third-most-popular streaming platform after Netflix and Hulu, is projected to see a 19.1% increase this year to nearly nine minutes per day.

As cord-cutting speeds up, more video consumption will shift to SVOD. The cancellation of live sports, as well as growing unemployment, will cause some consumers to cancel their cable subscriptions. In fact, eMarketer says 9.2% of respondents to their survey said they had already canceled or were planning to cancel their pay-TV subscription due to the pandemic.

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The survey, conducted on March 31, is indicative of the U.S. population on the criteria of gender, age, income, and living area. Most of these consumers are likely to replace traditional TV with digital video, leading to more time consuming subscription OTT content.

“Subscription streaming will remain the most popular way of consuming digital video for the foreseeable future,” wrote Blake Droesh, author of the report. “By the end of our forecast period, time spent will reach 70 minutes a day. That’s nearly 54% of daily time spent with digital video, which will average 130 minutes per day in total.”

Droesh cautions that daily time spent with digital video will eventually hit a ceiling due to market saturation.

“Any new-to-market subscription OTT services are unlikely to boost time spent,” he wrote. “Instead, they’ll have to edge out existing services for a piece of the pie.”

Analyst: ESPN+ Approaching 15 Million Subs as Sports Goes Digital

As live sports readies for a return with or without live spectators, people consuming sports at home on digital platforms is projected to increase, according to new data from eMarketer.

Disney-owned ESPN+ ($4.99) is expected to reach 14.9 million viewers this year, representing 40.8% of digital live sports viewers in the country. The platform grew rapidly last year thanks to a $9.99 bundle with Disney+ and Hulu.

eMarketer said 36.5 million people in the country will watch live sports digitally this year (when they resume) — including 23.7% watching via digital channels.

Almost half of those digital viewers will watch live sports through online platforms, including Sling TV, Hulu with Live TV, FuboTV and YouTube TV. The research firm says 17.1 million people will watch live TV on these platforms, up 13.3% from 2019. And 69.3% of online TV subscribers will use vMVPDs to watch live sports.

“In recent years, TV networks and pay TV providers have relied more on live sports as cord-cutting and audience erosion accelerate,” analyst Eric Haggstrom said in a statement. “Live sports represents billions of dollars in advertising and affiliate fees for the networks. Advertisers are eagerly awaiting the likely return of live sports in the fall as it is one of the few ways to reach a large, younger audience at scale.”