Streaming Facing Headwinds, Say Speakers at DEG’s EnTech Fest

The boom in streaming is hitting some headwinds, according to speakers at a May 4 research presentation during DEG: The Digital Entertainment Group’s EnTech Fest 2022 at the Skirball Center in Los Angeles.

“SVOD was really the winner of the pandemic period,” said the NPD’s Elizabeth Lafontaine. In-home entertainment “drove the entertainment industry over the past few years,” she noted.

“As we’ve gotten into 2022 many of these industries have started to soften, as experiences come back online,” she said.

Consumers are getting out and going to theme parks, traveling, seeing live shows, etc. — spending more on experiential entertainment. Experiential spending has returned to about 95% of what it was during the pre-pandemic period, she said.

“Experiential offerings are typically much more expensive, so it is going to eat into some of the other entertainment demand,” she noted.

As they get out, consumers are not engaging as much with SVOD, but “we’re still seeing engagement levels higher than the pre-pandemic period,” she said.

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Consumers reported spending on about four SVOD services (3.9 on average) in October 2021, which is down about one service from that time in 2020 (5.2). “But we’re still above that pre-pandemic period,” she said.

For streaming companies, the question is how to be one of those four services consumers choose.

In the past year, services increasingly turned to original programming, especially with licensed content being clawed back by studios’ direct-to-consumer services. In 2021, Netflix, Amazon and Hulu saw lower inventory throughout the year as this licensed content was pulled. But in response Netflix, for instance, by the end of 2021 grew original movie offerings by 22% and original series by 24%.

“Netflix has committed to spending about $17 billion annually on original content,” she said.

Also, with increased competition in the space for consumers’ time and money, “bundling and ad-supported is giving subscribers who may not have subscribed before a new point of entry to these services,” she said.

Another way consumers are economizing on subscriptions is through churn, noted Deloitte’s Kevin Downs. A recent Deloitte survey found the U.S. paid streaming service churn rate averaged 37%. “It’s high,” he said.

The churn rate was even higher among Gen Z and Millennials, with more than half of those respondents either canceling or canceling and adding paid services in the past six months. While access to original content (39%) and a broad range of content (38%) were the top two reasons U.S. consumers said they were subscribing to paid SVOD services, U.S. subscribers said they’re canceling paid SVOD services due to cost (41%), price increases (30%) and lack of new content (30%).

A majority (60%) of consumers would prefer to have reduced cost, ad-supported options, Downs noted.

Significant majorities of consumers also said they were frustrated with finding content and having to subscribe to so many services to find it.

In addition to cost and content concerns, services also have to compete with time spent on video games — a pursuit younger generations in particular may find more appealing than watching TV or movie content, he said.

Whip Media’s Vince Muscarella and Kortney Kesses noted that, aware of the appeal of games, streaming services are targeting gaming fans by creating content from game franchise IP.

They pointed out that “The Last of Us,” a series based on the game scheduled for HBO Max sometime in 2023, is already gaining some traction among fans, reaching 16,000 interested followers on their tracking service well ahead of other big titles this far ahead of release.

“It’s probably going to be HBO Max’s biggest release to date,” said Muscarella, who admitted he is one of those eager fans.

“Other companies are going to start paying attention to video game IP for content,” he said.

NPD: Only 50% of Homes in Continental U.S. Get True Broadband Access

A new “Broadband America” report from The NPD Group reveals that only 50% of homes in the continental U.S. have true broadband speed of 25Mbps download or higher despite the growing reliance on connected technology.

In fact, 34% of homes receive internet access at speeds of less than 5Mbps, including 15% that do not have any internet access, according to NPD.

Vermont, West Virginia, New Mexico and Mississippi are among the least-connected states, while New Jersey, Rhode Island, Maryland and California are among the most connected. In Vermont only 24% of homes receive broadband speeds, while in New Jersey 65% of homes do.

“The so-called digital divide is a result of many factors including availability of suitable internet services and the affordability of services that are available in more rural parts of America,” Eddie Hold, president of NPD Connected Intelligence, said in a statement. “But there is potential for this situation to improve relatively quickly, as a result of the American Rescue Plan Act and the Infrastructure Investment and Jobs Act, which are providing key subsidies for deploying faster internet services, as well as funding the Affordable Connectivity Program which provides subsidized internet service to lower-income homes.”

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According to the NPD’s “Rural America” report, more-rural and less-connected areas of the United States have far lower ownership levels of connected devices, as well as a higher level of price sensitivity for technology products ranging from TVs to streaming media players and beyond. In fact, while TV unit sales are roughly the same across rural and non-rural areas, the average price is 40% lower in rural areas. When looking at streaming media players, unit sales are nearly 60% lower in rural areas.

“The lack of higher-speed internet limits the opportunity for newer devices and services, as customers do not have the connectivity needed to generate a satisfactory experience,” Hold noted. “That has a ripple-on effect for consumer technology, limiting the need for larger, smarter TVs, streaming devices, or even tablets and newer PCs.”

Samsung, Roku, Sonos Among Top Brands in NPD’s Consumer Electronics Awards

The NPD Group’s technology division announced the winners of its annual Consumer Electronics Industry Performance Awards, honoring Samsung for its LCD TVs, Sonos for its soundbars and Roku for its streaming media player, among other companies.

Among the top increases in market share in North America, Samsung took the top prize for LCD TVs. Among the fastest-turning brands per item in the United States, Canada and Mexico, Sonos was the top U.S. soundbar. And among the top increases in online market share in the United States, Roku was the top streaming media player.

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“After an unprecedented year, we at NPD are excited to take a moment to acknowledge the many silver linings the consumer technology market experienced in the midst of the pandemic,” Ian Hamilton, president, technology sector, The NPD Group, said in a statement. “In this fifth year of our CE Industry Performance Awards we are recognizing brands that saw success providing consumers with products that enabled them to work and learn from home, as well as stay entertained and connected in their downtime. Congratulations to all award winners — we wish everyone a healthy and successful 2021.”

NPD: Online Video Consumption, Engagement Leapt in Q2

Free, transactional and subscription video all grew significantly in the second quarter versus the same period in 2019, according to NPD Group data.

The market experienced “growth across just about every way you can consume video,” said NPD’s John Buffone during the online OTT.X summit Sept. 1. (The summit continues today; to register click here.)

Transactional VOD alone jumped by 57%, while subscription VOD grew 42%, Buffone reported.

Sales of TVs and streaming players (“largely driven by Roku”) also grew by double digits during stay-at-home orders, he said, while sales of DVD and Blu-ray players also saw a jump in sales “for a while.”

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The most frequently used services in April 2020 (Netflix, Hulu, Disney+, CBS All Access, Amazon Prime Video) are gaining the most ground, NPD research found. Among that group, 87% of Netflix subs said they use the service at least weekly, with 80% saying the same of Hulu, 70% of Disney+, 68% of CBS All Access and 64% of Amazon Prime. During April, 48% of Netflix subscribers said they were using it more often, compared to 57% of Disney+ subs, 42% of Hulu subs, 40% of CBS All Access subs and 39% of Amazon Prime subs.

A third of SVOD users said that exclusive content made them subscribe or watch more because content was not available any other way, he noted.

NPD: Disc Sales Boosted During Pandemic in Areas With Less Population

Less-densely populated regions in the United States, often with lower numbers of COVID-19 cases and less stringent stay-at-home policies, drove up DVD and Blu-ray Disc unit sales growth since the middle of March, according to data from The NPD Group.

Since the middle of March, video disc sales in the populous and hardest hit areas of New England and the Mid-Atlantic census divisions were down 2% and 3%, respectively, compared with average weekly sales in January and February. Comparatively, disc unit sales in less-populated areas with fewer than a million residents increased nearly two times faster than more densely populated areas.

During the period, disc sales were up 3% in the South Atlantic section, 5% in East South Central, 8% in the East North Central, 9% in the West North Central, 11% in the West South Central, 11% in the Mountain, and 2% in the Pacific.

“It’s very encouraging to see so much DVD and Blu-ray Disc sales activity happening in these regions, demonstrating consumers’ appetite for quality entertainment,” said NPD analyst John Buffone.

Since shelter-at-home orders were first announced in the United States, there has been a 72% increase in the number of Netflix subscriber profiles that were used to stream video each week. Residents in the Tri-State region of New York, New Jersey and Connecticut, with some of the strictest shelter-at-home policies, spent significantly more time streaming on Netflix than the rest of the country, according to NPD.

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“While entertainment is not essential for survival, it’s still an essential way to stay sane, while people shelter at home,” Buffone said in a statement. “There have been notable streaming video preference shifts toward escapist titles and family programming that viewers are binging on to keep themselves entertained.”

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Using information from its Subscription Video Track service, NPD compared the Tri-State region with the remainder of the United States. While these two geographic areas experienced similar double-digit increases in the average number of weekly viewing profiles, there was a distinct difference in time spent streaming content from Netflix. In the Tri-State area, the average amount of time each Netflix profile was used to stream video on a weekly basis rose 37 percent after shelter-in-place orders were issued on March 21, which is 10 percentage points higher than the rest of the country.

NPD: DVD and Blu-ray Player Sales Jump in Pandemic

Consumers are getting physical.

Sales of DVD and Blu-ray players were both up 27% in unit sales for the week ended April 18 compared with same week a year ago, according to data from the NPD Group.

“Sales are up as consumers stay at home and look for multiple forms of entertainment,” said NPD analyst Stephen Baker. “These include DVDs and Blu-ray discs to entertain children while their parents are working, backup access devices if Internet access is challenged by streaming, or simply the consumers’ realization that they may need a physical disc player as an alternative to streaming and either they didn’t already have one or the one they do have needs an upgrade.”

Meanwhile, streaming player sales jumped 42%.

Overall, NPD-tracked U.S. Consumer Tech sales increased 23% year-over-year (29% week-over-week) during the week ended April 18 to nearly $1.8 billion. This topped the 21% increase tracked during the week ended March 21 sales spike.

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“We saw broad-based increases across almost all categories, unlike in March, when the work-from-home categories dominated,” Baker said.

TVs unit sales also jumped, exceeding 1.1 million units, the highest volume ever outside holiday, an 86% increase in units. Every TV size 32 inches and above had double-digit growth while 65 inch-and-above TVs were up 139%. Consumers also bought smaller sizes as 32-inch TVs, which declined by 15% over the first 10 weeks of 2020, increased by 40% over the last 5 weeks.

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Other strong categories included networking (70%), headphones (29%), printers (61%), DIY components (111%), PC microphones (147%), range extenders (173%), TV mounts (41%) and soundbars (69% in units).

More Than Half of Active Video Consumers Consume Some Digital Content

More than half (51%) of consumers who are active in buying or renting video content consume at least some digital content, which is 7 percentage points higher than last year, according to a study from The NPD Group.

Among all consumers who purchased or rented digital content, 18% are digital-only video consumers, which is 4 percentage points higher than last year, according to the report.

Still, among consumers who consume both physical and digital video content, 86% continued to purchase physical video discs in 2017.

“In the lifecycle of digital-video adoption, the early-adopter phase has finally given way to the majority phase,” said Ricardo Solar, SVP of video entertainment for NPD, in a statement. “Even so, among consumers who consume both digital and physical video content, the vast majority are still buying and renting physical discs.”

Growth in digital video purchases was driven mainly by heavy users who completed more than four transactions over the previous three months, NPD found. While these consumers represented just one-third of digital video purchasers, they comprised 69% of all transactions last year.

More than half of heavy digital video buyers purchased at Amazon and iTunes, and they over-index at Google Play and Vudu, as well, according to the report.

Digital video rental, or internet video-on-demand (iVOD), also grew last year, due to rental activity from both light and heavy users. Amazon was the retailer of choice for digital rentals, but heavy internet-video renters also over-indexed at iTunes, FandangoNow and Redbox On-Demand.

The research findings come from The NPD Group’s latest “Entertainment Trends in America” report, which is based on a consumer survey fielded from January to February 2018.

‘Moana’ Named Top-Selling Disc of 2017

NPD’s VideoScan DVD and Blu-ray sales tracking service has reported Walt Disney Studios Home Entertainment’s Moana as the top-selling disc of 2017 in the United States.

The animated film outpaced No. 2 Rogue One: A Star Wars Story, from Disney’s Lucasfilm division, according to VideoScan.

The top 10 titles on VideoScan’s list of 2017’s top-selling combined DVD and Blu-ray units were:

  1. Moana (Disney)
  2. Rogue One: A Star Wars Story (Disney/Lucasfilm)
  3. Sing (Universal)
  4. Wonder Woman (Warner)
  5. Guardians of the Galaxy Vol. 2 (Disney/Marvel)
  6. Fantastic Beasts and Where to Find Them (Warner)
  7. Logan (Fox)
  8. Spider-Man: Homecoming (Sony Pictures/Marvel)
  9. The Fate of the Furious (Universal)
  10. Doctor Strange (Disney/Marvel)

 

The VideoScan list differs slightly from the top 10 reported by tracking website The-Numbers.com, which reports unit sales and revenue based on estimates and industry surveys, though Moana was the top title on both lists.

The top 10, according to tracking from The-Numbers.com, were:

  1. Moana (Disney), 4.12 million units, $109.7 million
  2. Beauty and the Beast (Disney), 4.08 million units, $82.38 million
  3. Rogue One: A Star Wars Story (Disney/Lucasfilm), 3.75 million units, $77 million
  4. Trolls (DreamWorks), 3 million units, $65.47 million
  5. Guardians of the Galaxy Vol. 2 (Disney/Marvel), 2.85 million units, $57.3 million
  6. Sing (Universal), 2.81 million units, $57.42 million
  7. Wonder Woman (Warner), 2.61 million units, $68.77 million
  8. Fantastic Beasts and Where to Find Them (Warner), 2.4 million units, $51.03 million
  9. Logan (Fox), 1.94 million units, $41.02 million
  10. The Fate of the Furious (Universal), 1.78 million units, $40.2 million