Global OTT Video Subs to Top 265 Million by 2022

Spearheaded by Netflix and Amazon Prime Video, the number of global households with an over-the-top video service subscription will exceed 265 million by 2022, according to new data from Parks Associates.

The research firm contends OTT video use is being driven by increasing household adoption of connected media devices such as smart TVs, tablets and smart phones.

“Fifty-three percent of U.S. broadband households own a smart TV, and both smart TVs and streaming media players are continually improving the user experience to accommodate the shifting habits of consumers, including integration with voice-based digital assistant ecosystems,” Kristen Hanich, analyst at Parks, said in a statement. “The rise of these digital assistants is another key trend over the last few years, with Apple Siri, Amazon Alexa, Google Assistant, Microsoft Cortana, and Samsung Bixby, among others, now on the market. Both smart home and connected entertainment developers are working to integrate this functionality into their products.”

Parks contends consumers now own an average of 8.6 connected CE products in their home, an 87% growth in the average volume of devices since 2010. Additional research shows that more than 70% of U.S. broadband households have an Internet-connected entertainment device; 17% own both a smart home device and an internet-connected entertainment device.

Parks estimates over 265 million households worldwide will have a total of more than 400 million OTT video service subscriptions by the end of 2022. Much of it driven by household adoption Internet-connected appliances.

“Consumers prioritize general device interoperability over staying within a specific brand ecosystem when considering a purchase,” said Jennifer Kent, director, research quality & product development. “Three-fourths of consumers find it important to consider any smart home product brand that will work with other products in their home and 49% find this very important.”

 

 

Netflix Shoots Down Video Game Interest

Netflix has become much bigger than its 125 million global subscriber base. Like ecommerce behemoth Amazon, every move made by the SVOD pioneer can send ripples through Wall Street.

On June 13, TechRadar claimed an exclusive on Netflix’s plans to enter the video game business, including working with Telltale Games to produce a version of Minecraft: Story Mode and a separate game based on its original series, “Stranger Things.”

The games would be delivered through video files with users controlling game features through the TV remote or select/directional buttons.

The news sent shares of GameStop down more than 5%, in addition to lesser drops among publishers Activision Blizzard, Electronic Arts and Take-Two Interactive Software.

A Netflix representative shot down scuttlebutt it was getting into games, saying only that is working on a five-episode interactive series involving the Minecraft franchise to launch this fall, in addition to a separate game for “Stranger Things.”

“It’s an extension of our other interactive stories we have on our service like ‘Stretch Armstrong: The Breakout,’ ‘Puss in Book: Trapped in an Epic Tale’ and ‘Buddy Thunderstruck: The Maybe Pile,'” said Marlee Hart.

Hart said the Stranger Things project would be launching on the Telltale platform at a later date, not on the Netflix service.

“It’s part of our marketing and title promotion efforts,” she said. “There’s a broad spectrum of entertainment available today. Games have become increasingly cinematic, but we view this as interactive narrative storytelling on our service.”

 

Comcast Pledges Net Neutrality Support as Government Safeguards Expire

Comcast reiterated support for so-called net neutrality provisions the same day (June 11) the Federal Communication Commission’s “Restoring Internet Freedom Order” took effect, rolling back many safeguards intended to mandate a level playing field on the Internet.

In a blog post, Dave Watson, CEO of Comcast Cable, said the nation’s largest cable pay-TV operator would not change how it handles third-party streaming services on its broadband network.

“We still don’t and won’t block, throttle or discriminate against lawful content,” Watson wrote. “We’re still not creating fast lanes. We still don’t have plans to enter into any so-called paid prioritization agreements.”

Yet, throttling is precisely what Netflix co-founder and CEO Reed Hastings accused Comcast and other Internet Service Providers of doing in 2014. Hastings said Netflix was forced into paying “a toll” to “some big ISPs” so its subscribers wouldn’t be subjected to buffering and pixilated images.

“The essence of net neutrality is that ISPs such as AT&T and Comcast don’t restrict, influence, or otherwise meddle with the choices consumers make,” said Hastings at the time. “The traditional form of net neutrality which was recently overturned by a Verizon lawsuit is important, but insufficient. This weak [pre- 2015] net neutrality isn’t enough to protect an open, competitive internet; a stronger form of net neutrality is required.”

Hastings’ grumblings reached President Obama, who, together with former FCC chairman Tom Wheeler in 2015 helped push through tougher safeguards for streaming services – much to the chagrin of ISPs.

Under new FCC chairman Ajit Pai – a former cable lobbyist and Obama appointee – the agency did away with what Pai considered “unnecessary, heavy-handed regulations” imposed by Wheeler that characterized the Internet as a utility and regulated under the Telecommunications Act of 1934.

Watson contends the Internet can be better safeguarded under the same regulatory-light (i.e. scant government oversight) approach that helped create it.

“We continue to believe the best way to ensure lasting net neutrality rules that protect consumers and promote investment is for Congress to enact legislation,” he wrote.

German SVOD Market Growing

Among Western European countries, Germany and France have been slow to adopt subscription streaming video, including Netflix and Amazon Prime Video. That appears to be changing in Germany.

At the end of 2017, 18% of all German households were subscribing to at least one paid video-on-demand service, according to new data from Goldmedia.com. The market appears to be on a growth trajectory. Total revenue at the end of 2017 amounted to €1.1 billion and are anticipated to more than double within only five years, climbing to €2.5 billion by 2023.

Amazon Prime Video and Netflix continue to lead the pack in the German VOD market. Other players are British satellite TV operator Sky, Maxdome, Apple iTunes and Google Play. Specialist sports streaming services such as DAZN and Eurosport are also seeing an increase in users.

Goldmedia said SVOD services account for the highest share of turnover in the German VOD market with a market share around share of 74%, growing to 80% share by 2023.

Similar to the U.S., Amazon and Netflix are focusing heavily on producing original content in Germany. Goldmedia said licensed titles streamed via transactional VOD and electronic sellthrough are also popular among users, notably theatrical movies available to view on-demand just months after they have been released in cinemas.

The report said other key market drivers include access to content via smart TVs or special streaming devices such as the Amazon Fire TV Stick. The growing number of German households with high-speed broadband connections is also boosting VOD’s technical reach.

The rural market is continuing to play catch-up and is projected to be a major source of market growth going forward. Goldmedia predicts that every other household with a broadband connection will subscribe to a VOD service by 2019.

Unlike the U.S., major sports programming in Europe is increasingly going online. The first match of the 2017/2018 Bundesliga soccer season could only be viewed online via Eurosport’s streaming media device.

Amazon just announced an exclusive streaming deal with the U.K.’s Premier League, beginning in 2019.

Cost, User Experience Driving OTT Video Adoption

With pay-TV subscriptions down 10% among respondents in a new survey from Horowitz Research, the study found just 71% of 18-34 year-olds subscribe to a traditional pay TV service (cable, satellite, or telecom), compared to 75% of 35-49 year-olds and 81% of TV viewers 50 and older.

Although TV viewing remains bullish — respondents watch an average of 6.5 hours of TV a day — the reality that there are many lower-cost services competing for consumers’ video budgets is impacting the perceived cost-benefit ratio of traditional pay-TV.

According to the study, 74% of cable TV subscribers, 78% of satellite TV subscribers, and 80% of fiber TV subscribers say that they are satisfied with their TV service overall.

However, when asked how “worth it” the TV services they subscribe to are, cable, satellite, and fiber TV subscribers are less likely to say that their TV service is worth it compared to most over-the-top services.

Seventy percent of satellite and fiber subscribers and 62% of cable subscribers said their service is worth it; between 8% and 13% said their pay-TV is not worth it. On the other hand, 91% of respondents with Netflix said the service is worth the money; 83% among Hulu subs.

Digital pay-TV providers Sling TV and Hulu with Live TV also fare better than traditional pay-TV, with 79% of Sling subs and 77% of Hulu with Live TV subs voicing their approval.

In addition to exploring the value of TV and video services, the study also asked how interested TV viewers would be in either switching to a service like this from their cable/satellite/fiber service (if they currently had pay-TV service) or subscribing to one (if they did not currently have pay-TV service).

Nearly half (48%) of pay-TV subs expressed interest in online TV; which rose to 58% among 18-34 year-olds. While the data is based on a broad, general description of online TV and may not translate into actual cord-cutting, it does indicate a willingness among consumers to explore these services, and cost plays a major role.

Nearly 93% of respondents interested in online TV cited lower cost as a key factor. In addition, viewing and tech features among OTT services remains highly valued and, in many cases, more user-friendly than many linear TV set-top box guides.

“Over-the-top services like Netflix, Hulu, and Amazon Prime are … essentially VOD ‘on steroids,’ and they have tended to supplement, rather than cannibalize, services offered by traditional providers,” Adriana Waterston, SVP of insights & strategy for Horowitz, said in a statement.

“[Online TV does] compete directly with traditional providers by offering television, including sports and local channels in many markets, DVR service, and other elements of traditional TV, but for a lower price and with the app-driven, consumer-friendly OTT experience. It is incumbent on traditional players to continue to assert their value proposition at the same time as they pivot their businesses to serve consumers’ evolving expectations.”

 

Facebook-Owned Instagram Eyeing Original Video Content

Looking to compete in the long-form video space, social media photo app Instagram reportedly is eyeing third-party content deals.

In an attempt to supplement Facebook’s (which owns Instagram) Watch platform, while competing with Snapchat Discover and YouTube, Instagram is targeting music videos and other scripted programming for a platform launching sometime this month, according The Wall Street Journaland TechCrunch, which cited sources familiar with the situation.

Launched in 2010, the photo and video-sharing social networking service claims to have more than 800 million users, including about 500 million daily users.

Original video content on Instagram would not rival Netflix, Amazon Prime Video or Hulu, which collectively are spending billions of dollars generating TV shows and feature-length movies.

Instead, programming would follow the Watch strategy, which include just-announced news show launches from ABC, CNN, ABC and Fox.

“We have pushed intensely over the last six months to emphasize quality over quantity,” Campbell Brown, head of global news partnerships at Facebook, told CNNMoney. “This is another investment in quality news on Facebook.”

While current Watch programming include reality series, “Ball in the Family,” and comedies, “Strangers” and “Loosely Exactly Nicole,” among others, reports suggest questionable viewership despite Facebook’s 138 million daily users.

Notable exception: “Returning the Favor,” which follows Mike Rowe as he travels across the country in search of people who are giving back to their communities. The show reportedly generates 70 million views.

Rowe, who cut his teeth on Discovery Channel series “Dirty Jobs” and CNN series, “Somebody’s Gotta Do It,” has more than 5 million Facebook “friends.”

 

 

Netflix Greenlights ’13 Reasons Why’ Third Season Despite Parents Group Criticism

Netflix has approved a third season of its controversial teen original drama, “13 Reasons Why,” despite pushback from a parents group calling on Netflix to drop the show.

The series is about fictional teenage girl Hannah Baker (Katherine Langford) explaining posthumously why she committed suicide.

The SVOD behemoth announced the third season June 6, the same day of its annual shareholder meeting. CEO and co-founder Reed Hastings said “13 Reasons Why” has been “enormously popular and successful” among its subscribers, without providing exact numbers.

Nielsen claimed the recent launch of the show’s second season generated 2.6 million viewers. Netflix does not officially reveal viewership data of its original programming.

Hastings admitted the show is controversial, which is what he has long advocated Netflix must do to separate itself in the cluttered media landscape.

“But nobody has to watch it,” Hastings told shareholders.

Which is exactly what the Parents Television Council, a Los Angeles-based conservative Christian advocacy group founded in 1995, hopes to accomplish through an online petition launched last month.

Claiming to want to protect “young minds from dangerous streaming content,” the group – in the petition – is asking Netflix to immediately cease streaming season two of “13 Reasons Why,” in addition to implementing a pricing structure that enables Netflix subs to opt-out of streaming “sexually explicit, graphically violent, and harshly profane programming.”

“Netflix has delivered a ticking time bomb to teens and children who watch ‘13 Reasons Why.’ The content and thematic elements of the second season are even worse than we expected,” Tim Winter, president of PTC, said in a statement. “We would have liked to have 13 reasons for hope and redemption following the graphic suicide of the lead female teen character, but rather than providing a path forward, the season only provides cause for despondency.”

The PTC itself has long courted its own controversy, with critics contending the group is doing nothing more than promoting censorship. Indeed, the FCC reportedly disclosed in 2004 that the majority of its content complaints originated from the PTC.

Report: SVOD Shakeout on Tap?

Are there too many SVOD services?

Following a record year of 34 notable streaming launches in 2015, 2017 saw the debut of only 10 such services. And in a new study from L.E.K. Consulting, four out of every five consumers reported having just the right amount of video subscriptions.

“Despite the prevalence of cord cutters, subscription streaming services are now the ones that will need to adapt to survive,” stated Alex Evans, managing director in L.E.K.’s media and entertainment practice and co-author of “OTT in Transition: Finding Success in Subscription Video.”

“While the big players, like Netflix, are already winning, we expect genre-based services that successfully cater to niche tastes will also have a role to play,” he said in a statement. “Niche services will need to continuously update high-quality content, while ensuring their programming will resonate with their fickle audience. And larger video streaming platforms must keep an eye on what both traditional TV and emerging players are doing so they themselves don’t get disrupted by innovative content and pricing options.”

Among the dynamics subscription streaming video content providers will need to navigate, according to the L.E.K. report, are:

  • OTT consumers expect more for less — just like music fans who left pricey CDs behind for cheap streaming audio services — and are unlikely to add features that are not truly unique.
  • Targeted content and budget pricing do not guarantee success, as noted by the suspension of NBC’s $3.99 per month SeeSo comedy streaming service after less than two years.
  • Consumers are at the point where aggregators of these services (platforms that centralize a number of streaming subscriptions into one account) are of immense appeal, similar to why and how cable bundles came about. Millennials alone were found to simultaneously carry at least six different services each, with their preferred model of consumption being aggregator services.

More than 3 million U.S. consumers left pay TV behind in 2017 — a threefold increase in the past two years — dropping cable subscribership to less than 80% of households for the first time in 15 years, according to industry research cited by L.E.K. But the L.E.K. study points out these cord cutters are not actually consuming less video content. In fact, by 2020, the “big three” subscription providers (Netflix, Hulu and Amazon Prime Video) are expected to approach a combined 200 million U.S. subscriptions.

“What we’re seeing is a continued, steady movement away from traditional TV consumption, largely driven by millennials,” Evans said in a statement. “We found through our research that the primary factor behind this is cost. Pay TV packages can easily cost $75 to $100 per month, whereas a monthly web-based streaming plan might be $10. It’s worth noting, though, that overall savings may not be as much as planned, considering most consumers will lose their bundle discount on broadband when dropping cable. That, plus aggregating multiple streaming services together, can really start to add up.”

Just-Renewed ’13 Reasons’ Still Top Digital Original, Parrot Analytics Says

The top five digital originals for the week ended June 2 are the same as in the prior week, according to Parrot Analytics Demand Expressions data.

Netflix’s “13 Reasons Why” remains at No. 1, with a 15% increase in demand from the prior week.

The teen drama series, based on a teenage girl’s suicide, has just been renewed for a third season, Netflix announced June 6.

The second-most-popular digital original for the week ended June 2 is YouTube’s “Cobra Kai,” which also posted a 15% increase in demand from the prior week.

They are followed by Hulu’s “The Handmaid’s Tale” at No. 3 and two more Netflix shows, “Arrested Development” at No. 4 and “Orange is the New Black” at No. 5.

Season 3 of the DreamWorks’ children’s series “Trollhunters” premiered May 25, leading to an 87% spike in demand from the prior week – enough to propel the fantasy animation show to No. 6 on the weekly digital originals chart, up from No. 30 the prior week.

Netflix’s “Stranger Things” rose up a notch to No. 9 from No. 10 the previous week, after a nearly 11% increase in demand.

“Star Trek: Discovery,” from CBS All Access, dropped to No. 8 from No. 6 with a 5.5% decline in demand.

Media Play News has teamed with Parrot Analytics to provide readers with a weekly top 10 of the most popular digital original TV series in the United States. Parrot Analytics uses a proprietary metric called Demand Expressions, which measures global demand for TV content through a wide variety of data sources, including video streaming, social media activity, photo sharing, blogging, commenting on fan and critic rating platforms, and downloading and streaming via peer-to-peer protocols and file sharing sites.

Netflix to Join S&P 100

S&P Dow Jones Indices will add Netflix to the S&P 100 starting June 7, replacing Monsanto Co.

German pharmaceutical and chemical conglomerate Bayer AG is acquiring Monsanto in a deal expected to be completed soon, the S&P noted.

Netflix, headquartered in Los Gatos, Calif., is in the consumer discretionary sector and internet and direct marketing retail sub-industry.

Netflix closed June 5 trading with a market capitalization of $159.01 billion.

S&P Dow Jones Indices is a global resource for index-based concepts, data and research, and home to financial market indicators such as the S&P 500 and the Dow Jones Industrial Average.