How Netflix Got its Latino Mojo Back

Netflix has been a consumer hit across most ethnic groups since launching by-mail DVD rental service in 1997. Yet, the SVOD pioneer had apparently lost some favor among Latino streamers over the past few years with household penetration down 9% through last April, according to new data from IHS Markit/Technology.

Now that trend has reversed with Latino viewership up 4% in the past six months. The reason? Original Spanish-language programming that IHS says is driving viewers away from Prime Video to Netflix and Hulu.

“The movement of Latino audiences from Amazon to Netflix reflects the two services’ level of investment in Spanish-language content,”  analyst Fateha Begum said in a statement.

Top Netflix original shows include: “La Casa de la Flores,” teen murder series, “Elite,” “Narcos: Mexico,” “La Casa de Papel,” Netflix’s most-watched non-English series ever; “Club de Cuervos,” political thriller, “Ingobernable,” 1920s feminist workplace drama, “Las Chicas del Cable,” first Argentinian series, “Edha,” and crime thriller, “Estocolmo,” among others.

“Although Amazon leads in overall video content, with a total of 3.4 million hours of programming, Netflix offers 15 times more hours of Spanish-language content than Prime Video,” Begum said. “In terms of total hours of Spanish programming, Netflix is the clear leader in the U.S. video streaming market, followed by Hulu.”

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Citing an internal survey, IHS said 20% of respondents who subscribed to Netflix in the past year cited local content as the reason for subscribing. At the same time, with subscriptions based on month-to-month satisfaction, churn among all demographics is high, including Latino.

About 20% U.S. households dropped service over a 12-month period and did not return, according to the survey, while 30% signed up to at least one new SVOD service during the same period. Consumers also cancelled and re-subscribed to services to watch new seasons of content.

IHS said Latinos are twice as likely to cancel and re-subscribe to a video service as other consumers and 50% more likely to use a free trial only than the average consumer.

The London-based research group found Prime Video was the most cancelled video service among Latinos, while Netflix took the top spot among all respondents.

Netflix’s investment in Spanish content has increased considerably in the past years as it seeks to increase its worldwide subscriber base. Nearly 14% of Netflix’s catalog was comprised of Spanish language content in September 2019 — up 12% from the end of 2018.

The report contends Spanish-language content is vital for Netflix in Latin America, the United States and Europe where content quotas mandate 30% of programming be local.

While Netflix increased its Spanish language content by nearly 30,000 hours between December 2018 and September 2019, Amazon saw a decline of 2,000 hours. The majority of the change occurred in the first half of the year for both video services and mirrored the trend in penetration among Latino respondents.

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IHS said device distribution continues to play a role in SVOD choices for Latino subs, who are more likely to select services offering greater access to stream programming. While connected-device penetration tends to be marginally lower in Latino homes, IHS said the demand for accessibility stems from larger family sizes with four or more people.

Netflix Jan. 21 reports fourth-quarter fiscal results after the market close.

 

Netflix Driving African SVOD Growth

The African continent may be grand in size but remains relatively small when it comes to subscription streaming video. That should change in South Africa and outlying regions thanks to Netflix and other services.

New data from Digital TV Research suggests African SVOD market will top $1 billion in revenue by 2025 — six times the $183 million in revenue generated in 2019. The continent is forecast to reach 9.72 million SVOD subscriptions by 2025, up from 2.68 million at end-2019. South Africa (3.24 million by 2025) will remain No. 1 followed by Nigeria (2.14 million).

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The top six platforms accounted for 86% of SVOD subscribers by end-2019, which should increase to 94% by 2025. Netflix will add 3.6 million subscribers to total 5 million by 2025. Disney+ is not expected to enter the African market until 2022, but will have 1.37 million paying subs by 2025.

“Online video in Sub-Saharan Africa has had a delayed and sluggish start compared to the rest of the world, and its impact continues to be minimal despite several service launches and expansions in recent years,” IHS Markit said in 2018 report, citing infrastructure, regulation and regional language barriers as challenges.

Regional service Showmax will have 1.41 million paying subs by 2025 — with many more receiving it for free as part of their premium satellite TV subscription, according to DTVR. Multichoice has a distribution deal with HBO, which is likely to offset an HBO Max launch.

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“Over the last year, there has been a shift from cheap, local platforms towards the multinational players,” Simon Murray, principal analyst at Digital TV Research, said in a statement. “This means higher revenues as their prices are higher than local players, but it also keeps subscriber numbers low.”

IHS: U.S. Media Players Jumping on AVOD Bandwagon

In a burgeoning SVOD market, ad-supported video on-demand (AVOD) providers in the United States are on the offensive touting viewership and targeted ad spots, according to new data from IHS Markit Technology.

New AVOD roll-outs and improved ad-tech are expected to drive U.S. online video advertising revenue to $27 billion in 2023, growing 11% annually through 2023.

“The AVOD goldrush is here, and it represents a prime opportunity for service providers, new AVOD entrants and content companies,” Sarah Henschel, senior research analyst, media, for IHS Markit Technology, said in a statement. “Ultimately, the winners and losers in the AVOD industry will be determined not only by content, but also by data strategies and user acquisition.”​​

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The London-based research firm contends the U.S. online video market is seeing a renewed interest in ad-supported services this year due to the maturing of the subscription video market, fears of overcrowding across over-the-top (OTT) services and limits to total consumer spending across online video platforms.

This has spurred a surge in the uptake of AVOD by content owners that are increasingly opting to go directly to consumers. As a result, companies aiming to monetize online video content through advertising now face an extra layer of complexity due to the requirements for solid ad-tech sales and data strategies, along with content and user acquisition.

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Compared to a decade ago, AVOD companies today are competing in a more developed online video market that offers greater potential for digital advertising revenue and a more advanced advertising infrastructure.

Facebook and YouTube are expected to continue leading the market through 2023, trailed by Hulu, Roku, Pluto TV and Tubi, which are set to increase their market share. New players include NBC Universal’s Peacock and WarnerMedia’s HBO Now.

Despite the increasing number of competitors, there remains copious opportunity for new entrants to claim a slice of the growing AVOD revenue pie. As the competition intensifies, it is important for AVOD companies to sustain strong licensing partnerships with content owners and hone their data utilization skills for ad monetization.

“With the launch of premium services like Disney+, HBO Max and Apple TV+, AVOD services can continue to benefit from cord cutting and act as a compliment to paid services,” said senior research analyst Kia Ling Teoh. “Pure-play AVOD platforms also can expand customer penetration through B2B partnerships with device makers and online linear channels.”

IHS: Domestic 4K UHD TV Shipments Surge Due to Pending Chinese Tariffs

Sales and shipments of 4K UHD televisions has hit 60% market penetration in some parts of the world, including the United States, according to new data from IHS Markit.

Speaking Oct. 14 at the MIPCOM confab in Cannes, France, Paul Gray, research analysis director at the London-based IHS, said 4K UHD TVs now exceed more than half of all TV shipments worldwide.

The analyst contends there are more than 260 million 4K UHD households globally — a tally that is expected to reach 574 million households by 2023, according to Advanced-Television.com, which reported Gray’s comments from France. About 34% of North American homes have 4KUHD TVs, increasing to 64% in the next four years.

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Notably, domestic shipments of 4K UHD TVs surged in North America as distributors stockpile inventory ahead of any proposed tariff increases on Chinese-manufactured products by the Trump Administration.

Meanwhile, next-generation 8K resolution continues to grow slowly with 167,000 display units shipped in 2019. This is expected to reach 3 million units by 2023.

IHS: Apple TV+ Growth Hindered by iOS Mandate

When Apple bows its branded $4.99 monthly Apple TV+ subscription streaming video service on Nov. 1, it will be the cheapest SVOD platform on the market.

But being priced 50% below Netflix apparently isn’t good enough for IHS Markit, which suggests the service’s growth will be hampered by its exclusivity to Apple’s iOS platform.

Apple TV+ will be limited to the new iPhone, Mac, iPad and Apple TV streaming media device. The company is offering a free year of Apple TV+ with the purchase of any of the aforementioned devices.

Indeed, Apple is projected to sell about 70 million new iPhones through the winter holidays, in addition to Macs, iPads and Apple TVs.

Yet the data underscores the reality that Apple TV+ will have the potential to reach just 57% of the addressable market ion the United States, according to IHS Markit.

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By comparison, Netflix reaches 95% of the U.S. market — a percentage the pending Disney+ platform is expected to emulate.

“With its limited device distribution, Apple TV+ will be accessible to just over half the online population in the US, thus hindering subscriber growth,” analyst Fateha Begum said in a note. “Although Apple is the largest smartphone brand in the U.S. market and plans to offer free access with hardware purchases, the company would need to widen its device distribution to compete with OTT players that are now available nearly universally.”

Begum argues Apple should move beyond its iOS borders and make Apple TV+ available to Android devices. Indeed, the SVOD service is expected to be made available on Roku and Fire TV, in addition to Sony, LG and Vizio smart TVs.

“By opening up to other platforms, Apple TV+ will see its addressable base increase by 24% to 87 million U.S. households,” Begum said. “This will improve Apple’s position, but the company will still be at a disadvantage compared to competitors who can address the entire U.S. market of 124 million online households.”

 

Survey: U.S. Consumers Cite Video Streaming as Top Use for 5G

The 5G era is set to drive the next wave of growth in video streaming, with 78 percent of U.S. consumers indicating they will expand this activity as they adopt the next-generation wireless standard in smartphones and home-networking solutions, according to a survey conducted by IHS Markit, Digital Orbit.

When asked to name which types of activities they are likely to increase due to the arrival of 5G, consumers ranked video streaming first, ahead of video calling, social media, mobile gaming, virtual reality and augmented reality, according to the survey. As a result, the deployment of 5G will help cause video usage to grow to account for 70 percent of mobile network traffic in 2022, up from 47 percent in 2015, IHS reported.

“The promise of faster video streaming through 5G is generating enormous enthusiasm among consumers,” said Joshua Builta, senior principal analyst for IHS, in a statement. “Interest is particularly high for those younger than 50, with 81 percent of survey respondents in that age range citing video streaming as the top activity for 5G. Consumers are expressing strong interest in video streaming both on smartphones and for home internet services, which are equally supported by 5G.”

Current 4G wireless services already provide sufficient performance to support most types of video content commonly streamed today, according to IHS. As a result, 5G’s largest impact will be felt in emerging areas of the market, such as 4K Ultra High Definition video, according to IHS, as the 5G standard enables 4K on mobile platforms because of its increased capacity and speed. When coupled with the growing demand and supply of 4K UHD content, the proliferation of 5G will help drive mobile consumption of UHD content, according to the firm.

Also, the 5G standard will also be critical to promoting the consumption of general live video, IHS noted. This is particularly true for sports and live events, where lower latency and higher speed and bandwidth are critical.

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In parallel with the trends in the smartphone market, US consumers are expressing intense interest in engaging in 5G video streaming via home internet access, according to IHS. While often regarded purely as a mobile technology, the 5G standard also supports fixed wireless access (FWA) in the home. However, unlike fixed solutions such as DSL, cable or fiber, 5G FWA uses wireless mobile network technology to extend internet access into homes.

Most consumers said they are attracted to 5G FWA by its faster speeds. The average speed of broadband connections in the United States in 2018 was about 35 megabits per second. In contrast, 5G can theoretically operate at up to 1 gigabit per second, although initial deployments will be much slower, according to IHS.

Survey respondents also cited streaming of video, both prerecorded and live, as the most compelling reason to upgrade home internet service. A total of 74 percent of those surveyed named video streaming as the chief motivation for upgrading to 5G in the home.

IHS Markit forecasts that global over-the-top (OTT) video subscriptions will pass the 1 billion mark in 2021, up from 620 million at the end of last year. In 2022, OTT video subscriptions will surpass pay-TV subscriptions.

IHS Markit’s Digital Orbit report summarizes the results of a survey on how consumers perceive 5G and how they intend to use the new technology. The survey was conducted May 22-27, 2019, among 2,031 respondents, 95 percent of whom were U.S.-based. The median age of the survey respondents was 43, and 63 percent lived in urban areas.

IHS: China’s TCL Brand Tops North American TV Market

With just about everything made in China, it’s little surprise a Chinese television manufacturer has unseated South Korea’s Samsung for top unit sales in North America.

With China and the United States embroiled in a trade dispute, the rush to import Chinese TVs ahead of proposed tariffs is at a fevered pitch.

China’s TCL unit shipments climbed to 26.2% in the first quarter (ended March 31), up from 16% during the previous-year period, according to new data from IHS Markit.

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Perennial market leader Samsung saw shipments drop to 21.8% from 28%. No. 3 Vizio shipments nearly reached 14%, according to the data first reported by Advanced-Television.

TCL, which markets TVs featuring the Roku operating system, helped drive North American unit shipments up 30% to a record 9.3 million units.

Samsung still dominates the market in revenue (36.9%) due to its larger screens across its product line and higher price points.

“As uncertainty mounts around a possible tariff-driven rise in costs, these brands have been bolstering shipments to protect against any potential disruption,” Paul Gagnon, research executive director at IHS Markit, said in a statement. “Given that margins for TVs are relatively low compared to other consumer-electronics categories, any tariff increase would have a major impact on sales.”

 

IHS Markit, Informa Swap Business Units, including OTT and Media

London-based research firms IHS Markit and Informa May 22 announced a swap of select business units — including the former’s technology, media and telecom business for the latter’s agribusiness intelligence group.

Informa, whose focus has been on international exhibitions, events, information services and scholarly research group, will up its sights on over-the-top video (i.e. Netflix, Amazon Prime Video, etc.), media and related technology.

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The company is giving IHS Markit $30 million in cash to complete the deal, which is expected to close in July, pending regulatory approval.

“This agreement is very positive for both IHS Markit and Informa, increasing the focus of each company on core markets where [each] has particular strengths and a long-term commitment to invest and grow,” Lance Uggla, CEO of IHS Markit and Stephen Carter, group chief executive, Informa PLC, said in a joint statement.

“Our ambitions for Informa Tech will be further enhanced by the addition of the IHS Markit TMT portfolio, extending our customer and international reach, creating a strong platform for future growth,” added Carter.

IHS Markit will retain RootMetrics, its benchmarking business and a portion of its market intelligence business.

IHS acquired Markit in 2016 for $5.5 billion, creating a data analytics powerhouse. In 2018, it acquired financial services firm Ipreo for $1.86 billion.

 

IHS Forecasts Strong Global 4K UHD TV Growth

While 4K Ultra HD televisions have become commonplace in the United States at Best Buy, Walmart and Target, among other retailers, global adoption of the new high-definition format is still picking up speed, according to new data from IHS Markit.

The London-based research firm cited declining prices for big-screen TV driving wider consumer adoption. Speaking at the MIPTV confab April 8-11 in Cannes, France, Paul Gray, director research and analysis, technology, media & telecom, said there are more than 142 4K UHD channels on the market, including 49 channels in Europe.

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Gray says that next summer’s Olympics in Tokyo (July 24 – Aug. 9, 2020) generate will 4K UHD unit sales of 130 million worldwide.

IHS estimates that by 2022, 60% of North American households own at least one UHD video display, with another 40% among Western Europe homes.

Indeed, the report suggests that by 2022, TV’s with 75-inch screen sizes will drop to around $1,000, with some 8K units priced at $2,000.

“It has taken only five years: shipments broke 1% for the first time in Q4 2013. This is as fast as the move from standard definition to HD resolutions,” Gray said, as reported by Advanced-Television.

 

 

IHS: 22% of Web Users Employ Voice-Commands to Control TV and Video Devices

Voice-activated consumer electronics in the home is growing in popularity.

New data from IHS Markit found that 22% of Internet users across four markets – the United States, United Kingdom, Australia and India – use voice-command software to operate their TV and video devices, including smart TVs and set-top boxes. Another 30% are interested in doing so in the future.

Next to content recommendations, content discovery and navigation is vital for video services as 20% of video cancellations are due to a perceived lack of available content, according to IHS.

The most common reasons for cancelling video servicesfrom an online survey of 9,636 Internet users in Australia, India, the U.K. and the U.S. conducted in November 2018, included cost, lack of use and lack of available content.

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Indeed, IHS found that the burgeoning amount of content available across media devices puts the user experience at the forefront of device and platform strategies, including discovery, recommendations and navigation.

Voice command functionality represents an increasingly important element in content discovery, as it allows users to not only search for content, but also control the video interface in some instances. Consumers already using voice commands on video are more likely to own connected living room devices, which indicates they may already have access to large content libraries across various services and devices.

 

London-based IHS found respondents using voice commands to operate video devices are more likely to own, or at least have access to, connected devices that allow access to over-the-top (OTT) video. These devices include smart TVs, games consoles and media streaming sticks.

Voice-command use peaks among 25-to-34 year olds, compared to all adults aged 18 to 64. Older age groups continue to use traditional methods of content discovery, and many are not engaging with all the features and content available to them

Content catalogs are a key reason consumers subscribe and engage with video services, so ensuring the right content makes it to consumer TV screens is increasingly important,” analyst Fateha Begum wrote in her report.“Easing navigation and improving personalization are critical ways to increase value to video consumers, so large content catalogs don’t become burdensome to the user experience.”

Begum said voice functionality is a key element for device manufacturers – particularly within home entertainment. The ability for devices to communicate and control other devices has become evident, as brands are increasingly launching proprietary digital assistants, according to the report.

“For TV providers, innovating in the areas of content discovery and recommendations is a means to ensure their content is easy to find, driving greater value and  ultimately reducing customer churn,” Begum wrote. “Pay-TV operators have an advantage over most OTT streaming services, because they can manage the user experience on the set-top box and can ensure their own content is prioritized on the platform.”