U.K. Remains Netflix’s No. 2 Subscriber Market

The United Kingdom was Netflix’s second international market launch in 2012 following Canada in 2010. Through the first quarter 2020, the U.K. now represents slightly more than 13 million Netflix subs — second-largest behind North America with 69.9 million.

New data from Broadcasters’ Audience Research Board found that Netflix’s appeal in the U.K. after eight years remains strong, with the SVOD pioneer upping its sub base 13.4% from 11.46 million in 2019. Amazon Prime Video upped it sub base 32% to nearly 7.9 million homes, while Sky’s Now TV is found in 1.6 million homes.

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In Q4 2019, the proportion of homes with at least one SVOD subscription was 50.5%, a majority of homes for the first time. That percentage now tops 53% at 15 million. The percentage of homes with at least two services reached 24%, or 6.67 million homes.

Netflix and Amazon saw similar levels of growth in the number of households that subscribe to their services,” BARB wrote in a statement. “Amazon’s increase represents a larger year-on-year percentage growth versus Netflix’s due to Amazon’s lower number of household subscribers.”

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U.K. Pay-TV Operator BT Moving to Monthly Program Bundles

Taking a page from over-the-top video distribution, U.K. pay-TV operator BT is switching (beginning Feb. 21) from the traditional cable bundle to specific program packages priced on a month-to-month basis.

BT is also licensing Now TV from Comcast-owned Sky, enabling subscribers streaming access to myriad programming, including Netflix. The new range of program packages start at £10 a month ($13), increasing to £60 ($78) for the all-inclusive VIP package.

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The move comes as linear TV distributors continue to lose subscribers to lower-priced OTT video featuring programming without long-term contracts.

“Our new range of TV packs bring together the best premium services, fully loaded with a wide range of award-winning shows, the best live sports in stunning 4K and the latest must-see films — all with the flexibility to change packs every month — with quick and easy search to find what you want to watch,” Marc Allera, CEO of BT’s consumer division, said in a statement.

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Roku Manufacturing Walmart-Branded Streaming Video Devices

Lost in Roku’s recent impressive financial results was disclosure that the streaming media device manufacturer and operating software platform is working with Walmart to roll out branded hardware.

“We recently agreed with Walmart to offer several new Roku devices, including audio [speaker] products to their customers under their Onn brand,” CEO Andy Wood and CFO Steve Louden wrote in the shareholder letter. “This is in addition to Roku TVs and Roku players already sold through Walmart.”

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Roku manufactures OEM streaming hardware and sticks for Comcast/Sky-owned Now TV, among other European customers. The OS platform will be at the heart of NBC Universal’s pending streaming service.

Roku also remains one of the largest smart TV  brands due to its embedded OS platform in myriad third-party TVs, including Philips, RCA, JVC, Hitachi, Sharp, TCL and other Chinese-made units — many sold in Walmart.

The Roku platform revenue continues to drive the company’s growth at the expense of loss-leading hardware sales.

Platform (ad-supported) revenue in the second quarter (ended June 30) skyrocketed 89% to $167.7 million, while streaming device (hardware) revenue increased 24% to $82.4 million from $66.5 million last year.

Indeed, The Roku Channel has become one of the largest AVOD platforms delivering free, largely third-party catalog content.

With Walmart reportedly killing efforts to produce original content and a branded streaming video service around Vudu, partnering with Roku could help the world’s largest brick-and-mortar retailer remain relevant in the digital age.

It could also help Roku grow its 30 million active monthly accounts.

 

Comcast Disputes Media Report It Favors Roku Over Proprietary Streaming App

Comcast Feb. 4 issued a statement disputing an online media report that it plans to scrap development of a proprietary streaming app in favor of using Roku technology.

A report in BestAppleTV.com claimed Comcast Cable would bypass Apple TV as well as the tvOS app platform in development in favor of a Roku-designed smart box – similar to one manufactured by Roku for Sky-owned Now TV in the United Kingdom.

Comcast Corp. acquired Sky last year for $39 billion.

Media Play News reported Jan. 25 that Now TV, which was one of Roku’s first OEM clients for streaming media devices, including USB stick technology, is the third-largest OTT video service in the U.K. behind market leader Netflix and Amazon Prime Video.

Steve Burke, CEO of NBC Universal, appeared to underscore the move when he said Comcast’s pending AVOD service would incorporate Now TV technology and represented a good alternative for consumers not tethered to pay-TV/SVOD, while posing less of a risk in start-up costs.

“We think this approach has a much better chance to get scale quickly,” Burke said on the fiscal call.

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In a statement, Comcast said the BestAppleTV.com story contained “numerous inaccuracies” and “wrongly conflates” individual business dealings and relationships from Sky, NBC Universal and Comcast Cable.

“To be clear, Comcast Cable is deeply invested in development and innovation of its flagship whole-home platform, Xfinity X1, that is changing the way millions of people watch TV and manage the connected home,” wrote the cabler with 21 million subscribers.

Comcast said Xfinity TV customers can currently access their subscription via the Xfinity Stream app on iOS and Android mobile devices, and on computers and laptops via the Xfinity Stream web portal.

The cabler reiterated that subs can also access their TV subscription via the Xfinity Stream app for Roku devices and Samsung smart TVs (and soon LG and Sony smart TVs as well) or use their Xfinity credentials to authenticate more than 130 networks across more than 20 devices, including Apple TV, Roku, Amazon Fire TV, Google Chromecast, Xbox One and TiVo, among others.

Comcast said it “actively” remains in talks with other device manufacturers to distribute the Xfinity Stream app, “under terms that are mutually agreeable,” through the Xfinity TV Partner Program.

“[The program] continues to enable us to efficiently and effectively expand the range of devices our customers can utilize to access their Xfinity TV subscription,” wrote Comcast.

 

Comcast Eyeing AVOD Service in Europe

Comcast continues forge a business strategy in the United States melding ad-supported digital distribution with legacy pay-TV. Across the Atlantic, the media company has become a major over-the-top video player in the United Kingdom, Germany and Italy.

The cabler’s $39 billion acquisition of satellite TV operator Sky included Now TV, the 7-year-old telecom with operations in the U.K., Ireland and Italy. Now TV provides standalone online TV, high-speed Internet and landline telephone services.

Now TV, which was one of Roku’s first OEM clients for streaming media devices, including USB stick technology, is the third-largest OTT video service in the U.K. behind market leader Netflix and Amazon Prime Video, according to Broadcasters’ Audience Research Board (BARB).

Through the third quarter (ended Sept. 30, 2018), more than 11.6 million homes in the U.K. had subscriptions to Netflix, Prime Video or Now TV – an increase of 22% from the previous-year period, according to BARB.

The research firm said Now TV ended the period with 5.7% household penetration and 7% million usage among consumers. That compared to 17.2% households (21% consumers) for Prime Video and 34.1% households (49.3%) for Netflix.

Now TV use grew 12.1% among households (11.6% among consumers), compared to 27.7% household (25%) growth for Prime Video; and 29.6% household (27.7% consumer) for Netflix.

Netflix continues to spearhead OTT video use, adding 2.2 million homes in Q3, while Prime Video and Now TV added more than 1 million homes and just under 200,000 households, respectively. BARB said the number of homes with two or more OTT services increased 40% from 2.8 million to just under 4 million in the past year.

Comcast says the addition of Sky (and Now TV) expanded the media company’s direct-consumer relationships to more than 54 million across the U.S. and Europe.

Steve Burke, CEO of NBC Universal, says Comcast’s pending AVOD service would incorporate Now TV technology and represents a good alternative for consumers not tethered to pay-TV/SVOD, while posing less of a risk in start-up costs.

“We think this approach has a much better chance to get scale quickly,” Burke said on the fiscal call.

 

Report: Netflix to Reach 10 Million U.K. Subscribers by Year’s End

Netflix is reportedly set to reach 10 million subscribers in the United Kingdom by the end of the year — about seven years after launching in the region, including Ireland. The U.K. was the subscription streaming video pioneer’s second international expansion after Canada in 2010.

Major sub drivers include recent Comcast acquisition Sky — the British satellite TV operator, which now affords direct access to Netflix for its Sky Q subs. And Virgin Media, with more than 30% of subs accessing Netflix through their set-top device, according to research firm MTM London.

MTM disclosed the data — based on an online survey of more than 3,000 respondents over the age of 16 – in its latest Screen Think report.

As expected, the data confirms the popularity of over-the-top video among younger consumers, with nearly 40% saying they look to Netflix, YouTube and Amazon Prime Video first when looking for video content.

“The … study provides a fascinating snapshot of a market in transition, demonstrating the significant impact of Netflix and other OTT video services in the U.K. market,” Jon Watts, managing partner at MTM, said in a statement.

Watts said U.K. broadcasters and pay-TV providers have upped their respective OTT video strategies and remain in a strong competitive position through streaming video products such as the BBC iPlayer, All4, the ITV Hub, My5 and Now TV.

“We’re clearly seeing signs of significant shifts in consumer attitudes [toward Netflix] and perceptions of quality, in terms of content, value for money and innovation,” he said.

Netflix ended its most-recent fiscal period with more than 130 million paid subscribers globally.

 

SVOD Subs Top Pay-TV in the United Kingdom

The number of consumers in the United Kingdom subscribing to an over-the-top video service such as Netflix or Amazon Prime Video has – for the first time – surpassed those opting for linear pay-TV, according to new data from Ofcom, the communications regulator in the U.K.

Subscriptions to the three most popular online streaming services – Netflix, Prime Video and Sky’s Now TV – reached 15.4 million in the first quarter, overtaking pay-TV subs at 15.1 million.

The amount of time consumers spent watching broadcast television continues to decline. In 2017, the average was 3 hours 22 minutes a day, down nine minutes (4.2%) from 2016, and 38 minutes (15.7%) since 2012.

There were steeper declines among children and viewers aged 16 to 34, meaning consumers over the age of 65 watched four times as much broadcast television as children in 2017.

“Today’s research finds that what we watch and how we watch it are changing rapidly, which has profound implications for UK television, Sharon White, CEO at Ofcom, said in a statement.

The regulator found daily viewing time across all devices stands at 5 hours one minute, of which two-thirds (three hours 33 minutes or 71%) was broadcast content, and 1 hour 28 minutes was non-broadcast content.

However, among 16- to 34-year-olds, total daily viewing time in 2017 was 4 hours 48 minutes, of which less than half (two hours 11 minutes or 46%) was to broadcast content, with just under an hour per day spent watching content on YouTube.

“We have seen a decline in revenue for pay TV, a fall in spending on new programs by our public service broadcasters, and the growth of global video streaming giants. These challenges cannot be underestimated,” White said.

Indeed, the BBC, ITV, Channel 4 and Channel 5’s £2.5bn combined spending on original, UK-made programs in 2017 represented a record low – and is £1bn (28%) less than the 2004 peak of £3.4bn. An increase in funding from third parties towards the cost of program-making has partly helped to offset this decline.

“But UK broadcasters have a history of adapting to change,” said White. “By making the best British programs and working together to reach people who are turning away from TV, our broadcasters can compete in the digital age.”

 

Amazon Prime Video U.K. Grew Faster Than Netflix in 2017

Amazon Prime Video grew its subscriber base 11% in the United Kingdom in 2017, compared to 9% sub growth for rival Netflix, according to recent data from ratings firm Broadcasters’ Audience Research Board (BARB).

The firm said Prime Video ended the year with 4.3 million subs, compared to 8.1 million for Netflix. Prime Video ended 2016 with 3 million subs, compared to 6.5 million for Netflix.

Prime Video, which is included in the annual Prime membership, together with Netflix and Now TV accounted for 10.2 million combined subscribers – which trails multiplatform pay-TV operator Sky with 12 million subs.

Sky’s broadband-based Now TV has about 1.5 million subscribers.

Rick Broughton, analyst with Ampere Analysis in London, told The Guardian Prime Video has attracted subs by melding enhancements in ecommerce with upticks in original content spending on programs such as “The Grand Tour,” sports rights to ATP Tennis and future “Lord of the Rings” TV series.

“Amazon is making big strides to invest in content, but it is still not close to the extent of the Netflix originals slate and it doesn’t yet have the same brand perception for TV as Netflix does,” Broughton said. “If Amazon continue to invest at the rate they are … bundling it with the general attractiveness of Amazon Prime, there is a good chance they could catch up in the future.”