Parks: 40 Million U.S. Households Trialed/Subscribed to at Least One SVOD Service in the First Half of 2021

New data from international research firm Parks Associates’ new consumer study OTT: Perception, Use, and Business Models finds that 40 million U.S. internet households trialed and subscribed to at least one subscription streaming video service in the first half of 2021. The research analyzes consumer use and perception across multiple business models, their libraries, and features.

Free trials offer consumers the opportunity to experiment with different streaming services. Nearly 50% of U.S. internet households trialed at least one service in past six months, and 78% of those households ended up subscribing to at least one of these services. While major services such as Netflix and Disney+ have dispensed with free trials, smaller services find that trials turn into subscribers and help them stay competitive in this crowded market.

“Trials are an effective onboarding tool, with 40 million households trialing and then subscribing to at least one service in the past six months,” Eric Sorensen, senior contributing analyst, said in a statement. “The more services consumers try, the more they are likely to subscribe to at least one. Consumers who frequently trial different services are highly engaged video consumers in general, so services need to cater to these users.”

For consumers, content ultimately drives their decision to stay with a subscription. The large providers are planning significant content development expenditures in 2022 and beyond. For example, Netflix is set to spend more than $17 billion on content, while Disney+ has committed to spending $33 billion on programming and content.

“Low-cost barriers drive consumers to sign up for free trials, but the content will keep them,” Sorensen said. “All content creation efforts are focused on acquiring new customers and retaining those who are already subscribed by providing compelling content.”

Parks: 25% of U.S. Internet Households Subscribe to More Than Nine SVOD Services, An All-Time High

U.S. connected households love their streaming video options. New data from Parks Research’s OTT Video Market Tracker shows that service-stacking is at an all-time high. The Dallas-based firm’s quarterly survey of 10,000 internet households found that nearly 25% of respondents reported subscribing to nine or more streaming services in the first quarter (ended March 31). About 50% of surveyed homes have four or more services.

“Service-stacking in the U.S. continues, but there will be a saturation point where households will no longer be willing to add another service and may look to trim back on their number of subscriptions,” Erik Sorensen, senior contributing analyst, said in a statement.

Sorensen said service providers are anticipating this and looking to expand worldwide with content and coverage to boost their global offerings.

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“This global push led to a bidding war for the exclusive streaming rights to the Indian Premier League cricket event, where Mumbai-based Viacom 18 beat out Disney,” he said. “All providers are looking for new avenues to expand their global appeal.”

Parks: Traditional Pay-TV Service Dropping to 76.7 Million Households by 2024, a 27% Decline in 10 Years

New Parks Associates data confirms that pay-TV subscriptions and revenues are on a continuous decline as consumers embrace OTT video services. The Dallas-based research firm forecasts that traditional pay-TV will decline to 76.7 million households by 2024, the lowest penetration in a decade and a 27% drop from 2014.

“Streaming’s debut changed the trajectory of the modern video service industry,” Paul Erickson, director of research, said in a statement. “The ease of [service] trialing, subscribing, and cancelling services has created new dynamics and challenges for content companies and service providers.”

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Traditional pay-TV companies are making their move to streaming and are rebranding, making big acquisitions, and forming new partnerships. As they enter the streaming market, new OTT services join more than three hundred direct-to-consumer streaming platforms in the U.S. market alone, according Parks.

That’s a gluttonous market condition.

With so much choice and no long-term contracts required for streaming video services, churn across all OTT service providers is increasing, and services are struggling to retain their viewers. Parks’ data suggests that OTT subscription services averaged a 48% churn rate in the first quarter of 2022, which is a 10% increase in just two years.

Parks: Sports Most-Popular Live-Streamed Content

Parks Associates’ new video research May 9 reports that 43% of U.S. internet households have live-streamed online content in the past three months, with sporting events by far the most popular type of content.

Sixty-one percent of live-streaming users have recently watched a live sporting event online, while newscasts, the second most popular type of content captured only 36% of live-streamers.

“Consumers who subscribe to online sports services or those who subscribe to a premium pay-TV sports package are more likely to live-stream,” Paul Erickson, director of research at Dallas-based Parks, said in a statement. “Right now, sports content is key to drawing and keeping an engaged live-stream viewer base. Even with content that benefits from live consumption — such as news and concerts — significantly fewer consumers are livestreaming this content compared to sports. The sports audience is significantly more engaged in livestreaming as a whole.”

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Indeed, sports is the reason Amazon Prime Video is spending $1 billion annually to exclusively live-stream “NFL Thursday Night Football” with play caller Al Michaels and former ESPN college football analyst Kirk Herbstreit.

Parks found that 78% of those who subscribe to an OTT sports service have live-streamed, as opposed to just one-quarter of those who do not subscribe to an OTT sports service. Consumers who regularly live-stream content are engaged users. For many, live-streamed content is their primary content consumption. Consumers who live-stream estimate that live online content comprises close to half of their total online video consumption. Among heavy live-stream viewers, on-demand content comprises just over one-quarter of their online video consumption.

“Offering live-streaming content is an opportunity for services to draw both the highly engaged heavy live-streaming audience and live-stream-centric older audiences,” Erickson said. “Consumers in the higher age brackets can be difficult to target, but live-streaming is one option that appeals to them, provided the provider delivers the right content.”

U.S. Internet Households Pay Average of $116 Per Month for Internet

U.S. internet households pay an average of $116 per month for their home internet, including both standalone and bundled internet, according to a new report from Parks Associates, “Quantified Consumer: Fixed vs. Wireless — Consumers’ Shifting Broadband Preferences.”

The report also noted consumer savings of $600 to $1,800 annually should consumers cut their home internet service.

According to the research, there are more than 13.9 million home internet cord-cutters in the United States, a missed revenue opportunity of more than $10.5 billion. Cord-cutters exist for a variety of reasons, according to Parks. Cost and preference for mobility are top triggers, but technical issues and lack of availability also impact their decisions.

“Consumers overall are increasingly concerned with quality over price; however, older households are concerned about costs,” Kristen Hanich, director of research at Parks Associates, said in a statement. “Over 80% of those 65-plus cite cost as a factor for cancelling their home internet, and almost two-thirds of this age group say that they prefer using their mobile internet.”

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While there is some interest in canceling home internet services, consumers are increasingly upgrading to Gigabit speeds and adding on additional value-added services. A growing percentage of consumers are likely to be more concerned with the quality of their home internet service over the price, according to Parks. The pandemic, work at home, and increases in video consumption and video conferencing have all put pressure on networks, highlighting the importance of quality internet to consumers. Currently, half of home internet households receive at least one additional non-traditional service from their ISP.

“Consumer intention to upgrade their home internet service remains at an all-time high,” Hanich said. “ISPs must elevate their value proposition or risk losing their customers to competitors.”

Parks Associates: Home Internet Service Cancellation Triggers

Parks: 59% of OTT Subs Prefer Combining Household Subscriptions

Parks Associates announced a new survey study, which reveals that 59% of OTT subscribers said they prefer one bill and one account for all of their home subscription services, while 48% feel their home internet service provider adds more value when online video services subscriptions are offered.

“Simplicity has a fundamental appeal to consumers that service providers can leverage,” research director Paul Erickson said in a statement. “Consumers are seeing value and simplicity in receiving a bundle of channels and services from a single source, and they are increasingly seeking out options that offer OTT services bundled with their home services.”

The study found that 40% of OTT subscribers report that 100% of their streaming services are bundled through a home service provider. In contrast, just 31% of OTT subscribers report none of their services are bundled through a home service provider.

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While some of these consumers prefer to keep their video and home services separate, many are simply not aware of the availability of online video service bundled offerings.

Word of mouth and recommendations through family and friends are the main avenues for households to discover these bundling options, so home service providers can increase adoption, especially among consumers ages 18-44, by encouraging current subscribers to discuss these offerings within their social circle.

“Verizon’s newly announced Verizon Plus Play, in partnership with Netflix and other services, is an example of service providers serving these consumer demands for simplicity and convenience, via unified subscription management and billing for multiple OTT services,” Erickson said. “The addition of OTT services to service providers’ subscription and bundled service offerings is a viable way to add value, increase long-term ARPU, reduce subscriber churn, and increase stickiness with consumers.”

Parks Survey: Consumer Purchases of Sony Smart-TVs Grow

Out of the top five brands, Sony showed clear growth among smart TVs purchased or received in the previous six months compared to 2020, pushing it past Vizio and into the top three for reported purchases in Q3 2021.

That’s according to Parks Associates’ latest update of its Consumer Insights Dashboard, an ongoing service that tracks adoption of consumer electronic devices and services through its quarterly surveys of 10,000 U.S. internet households.

“Samsung continues to lead smart TV adoption, and it currently comprises over one-fourth of all consumers’ primary smart-TVs in the U.S.,” Paul Erickson, director of research for Parks Associates, said in a statement. “While smart-TV adoption is at all-time highs, there may be short-term saturation and conservatism in effect while consumer smart-TV purchasing settles following dramatic increases in 2020. Sony still managed to grow in purchasing — despite downturns for the traditional top three brands — which may be related to its first-mover release of new Google TV Bravia models over 2021.”

Heightened entertainment consumption has driven sustained high purchase intent for connected entertainment devices, according to Parks. Smart-TVs have not only become the most-adopted streaming video device but also the most favored for video consumption. Among survey respondents, 56% own a smart-TV; 73% own a home network router; 39% own a gaming console; and 57% own a desktop computer.

Smart-TVs, along with smart speakers/displays and desktop PCs, experienced growth during the pandemic due to an increase in consumers’ perceived value of these devices, according to Parks. Smart-TVs and smart speakers/displays have shown durability in sustaining growth and are expected to maintain elevated adoption in years to come.

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“This is notable given that the aggregate trend across categories has been a very gradual decline in overall usage since 2017,” Erickson said in a statement. “Smart-TVs have become the most-important media centerpiece for the home, and their prominence offers the industry numerous integration opportunities for smart home and connected health ecosystems.”

Parks: Amazon Prime Video Reaches 45% of U.S. Households

New consumer research from Parks Associates reveals that as of the third quarter of 2021 (ended Sept. 30), Amazon Prime Video’s subscriber penetration rate stood at 45% of U.S. internet households. By comparison, Netflix household penetration ranges from 55% to 67%, according to various industry reports.

“Amazon’s Prime pricing rise, the fourth in its history, comes barely a month after Netflix raised its fees, while Hulu raised its prices last year,” Eric Sorensen, senior contributing analyst at Dallas-based Parks, said in a statement.

Sorensen said Amazon’s debut of its “Lord of the Rings” trailer during the Super Bowl was aimed at underscoring consumer value of the Amazon membership and free video access — despite the subscription price increase.

“With inflation and the cost of content on the rise, we will likely see more providers start to slowly raise their subscription prices, trying to find that balance between revenue growth and consumer value,” Sorensen said.

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Parks estimates that in the first quarter of 2021, 77.3 million U.S. households were members of Amazon Prime and that around 71% of them watched Prime Video. Amazon Prime Video is one of the four foundations of the consumer streaming stack, along with Netflix, Disney+ and Hulu.

Prime Video, like its streaming video competitors, is investing in original content offerings to keep its subscribers engaged, to encourage new subscribers, and to lure cord cutters and service hoppers. Many OTT services aired Super Bowl ads this year, promoting not just one title but the range of their content library, to remind viewers of the total value of each subscription.

“These price increases by Amazon have been fully vetted out as part of their long-term strategy to generate more revenue from subscribers over time,” Sorensen said. “Supply chain and increasing shipping expenses are being passed down to customers, but it is doubtful that Prime members will object to a twenty-dollar-a-year membership rise, the first in four years.”

Parks: 36% of Streaming Video Subs Stop/Start Multiple Services

A new Parks Associates report finds 36% of over-the-top video subscribers, roughly 32 million U.S. households, are “service hoppers,” defined as subs who switched between services and resubscribed to services multiple times in the previous 12 months. The report details the challenges in subscriber acquisition and retention and the latest developments in data and analytics used to improve business operations and better engage subscribers.

Dallas-based Parks finds that all methods where subs interact with OTT services, from subscription to platform usage, are rapidly diversifying. In the early market, households would subscribe directly via an OTT provider’s website, but the percentage of households subscribing directly via an OTT provider’s website declined from 41% to 29% between Q1 2020 and Q3 2021. Instead, households are taking multiple paths to video subscription, including through OTT aggregators, including Roku and Amazon Fire TV.

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“Data collection and analysis offer new ways to attract and retain viewers, optimize revenue, and create new value,” Elizabeth Parks, president and CMO, Parks Associates, said in a statement. “Data allows vendors to identify subscribers at risk of churn and can even tag the ‘server hoppers’ who will jump in and out of services no matter what, so that providers do not waste resources chasing them in vain. Advanced data tools help companies make more informed decisions about the content and structure of their services and special offerings.”

Given the enhanced value of subscriber data, some content providers are seeking to re-establish control over their viewers — and the data about them — by not offering subscriptions via aggregators. In 2021, a substantial group of streaming households subscribed to a service via Amazon Prime Video Channels, but that percentage could drop in the future, as HBO and HBO Max were removed from the platform in September. Likewise, Disney+ is not available through major aggregators, and NBC recently announced it is moving many of its shows exclusively to Peacock and away from Hulu.

Parks: 31% of U.S. Internet Households Watch AVOD Services

The ongoing proliferation of over-the-top video consumption in U.S. broadband homes finds that 31% of households watch ad-supported VOD services, with another 40% having consumed a live event online in the past three months, according to new data from Parks Associates.

The Dallas-based research firm is hosting a virtual panel March 31 as part of its fifth annual Future of Video: OTT, Pay-TV, and Digital Media conference series.

“The future of entertainment involves customers streaming content in new ways, satisfying content needs anytime and anywhere, through subscription and free models,” Jeremy Simon, VP and head of global streaming partnerships for Amdocs, and confab panelist, said in a statement. “These new business models mean meeting the customer needs is more complex than you might think.”

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Other panelists include:

  • Susan Agliata, director of business development, OTT ecosystem, for Samsung Electronics
  • Lior Friedman, SVP of business development for Amagi Corporation
  • Tom Goedde, chief marketing officer for SimWin Sports
  • Ben Grad, SVP, head of content strategy and acquisition, for FuboTV
  • William Marks, SVP of business development and digital for ovation television
  • Nick Meacham, CEO of SportsPro Media
  • Geoff Reiss, head of fantasy and gaming for Yahoo Sports
  • Marty Roberts, VP of media analytics at Brightcove
  • Sourik Samaddar, manager of consumer solutions at Akamai Technologies
  • Chris Wilson, director of market development, sports, at MediaKind

 

“WarnerMedia leans into our partner relationships to attract new audiences to HBO Max and works with these platforms to keep customers engaged,” said Melissa de la Rama, VP of distribution, at the pending Warner Bros. Discovery media company. “I look forward to discussing how we find success working with our distribution partners.”