Parks: SVOD Dominates Home Entertainment; Transactional VOD Is Growing

It may be an over-the-top video world, but new data from Parks Associates finds that transactional VOD, including digital sales and rentals of movies and TV shows, is increasing in the home.

The Dallas-based research firm, citing a first-quarter survey of 10,000 U.S. broadband households, shows overall video viewing grew by 45% from Q3 2018, with a continued rise in TVOD services. The latter doubled from 7% in Q3 2018 to 14% in Q1 2020.

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Retail sales of movies has been driven by early home entertainment access to Universal Pictures’ Trolls: World Tour, The Invisible Man, Emma. and The Hunt, in addition to Warner Bros.’ Scoob!, among others.

“Many steps in content windowing were narrowing already, but the current shelter-in-place orders pushed the digital distribution of new theatrical content to the front to offset the lost revenue from closed movie theaters,” research director Steve Nason said in a recent statement.

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“There are more than 200 OTT services in the U.S. alone, and many struggle to grow after launch,” added senior director Jennifer Kent. “Subscriber management platforms are one factor that can impact how video services expand beyond early growth stage. There are so many new opportunities to be able to capture the consumer with billing management, personalization features, and continuous interaction.”

Parks: Disney+, Apple TV+ See Success in First Six Months of Business

New data from Parks Associates suggests Apple’s foray into the subscription streaming market is stronger than speculated.

Since Apple TV+ launched last November, around the same time as Disney+, it has taken a backseat to the much-ballyhooed SVOD service from the Walt Disney Co.

And, indeed, Disney+ has an enviable 25% adoption rate among U.S. broadband households after just six months in the market, Parks Associates says.

And yet Apple TV+ has reached nearly 10% adoption, according to Parks — not a bad showing, considering how much more hype the Disney platform has received.

Disney+ and Apple TV+ are fourth and fifth, respectively, among SVOD services adopted by consumers.

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Parks’ data was generated from an online survey of more than 10,000 consumers fielded between March 8 and April 3 to heads of broadband households, after the COVID-19 crisis had begun in the United States.

Additional data from the market snapshot:

  • Nearly three in 10 broadband households report their use of online video services has increased because of the COVID-19 outbreak.
  • 81% of Disney+ subscribers subscribe to Netflix, as do 72% of Apple TV+ subscribers. Nearly one-half of Disney+ subscribers canceled another OTT service over the last 12 months, as did roughly two-thirds of Apple TV+ subscribers.

“Disney took a broad-based content approach to its Disney+ service, including its Pixar, Stars Wars, Marvel, Nat Geo and 20th Century Fox properties to make it broadly appealing, far beyond its traditional audience of families with young children,” research director Steve Nason said in a statement. “Very few Disney+ subscribers subscribe only to this service, so households are not picking up Disney in place of another service but adding to their home’s other OTT services. We will see, as household budgets tighten up, if Disney+ has done enough to become an ‘essential service’ for its subscribers.”

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The Dallas-based research group said Disney+ also benefited from promotions such as the introduction of the $9.99 Disney+/Hulu/ESPN+ bundle and its partnership with Verizon where unlimited mobile subscribers and new internet subscribers get a free year of the service.

“Apple TV+ promoted a small stable of original programming and is now looking to supplement that with more third-party content,” Nason said. “Apple TV+’s growth is due largely to a free year of service for those who recently purchased an Apple device, which brings the firm’s brand loyalists into the service. Apple TV+ does have a higher percentage of exclusive non-Netflix subscribers, plus a higher number of households that recently cancelled another OTT service, so it appears Apple does have a core group of dedicated subscribers. Apple’s challenge is to expand beyond that group.”

Parks: 67% of U.S. Broadband Homes Use at Least One Streaming Video Device

It’s an over-the-top video world and, as expected, new data from Parks Associates finds 67% of domestic broadband households use at least one Internet-connected video device, either a smart TV, streaming media player, connected gaming console, Blu-ray Disc player — or smartphone.

“These platforms stand to win big as consumers increasingly sign up for OTT service through storefronts like Amazon Prime Video Channels, Apple TV Channels, or Roku Channel Premium Subscriptions,” senior analyst Kristen Hanich said in a statement.

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Parks’ “Connected Entertainment Ecosystems: Competition & Cooperation” report notes that while all of the aforementioned devices get plenty of use, they also have long replacement cycles, which is driving manufacturers to explore new strategies, including software and service offerings, exclusive hardware-content bundles, and open ecosystems.

“The increasing fragmentation in the content services market means there’s no single path to reach consumers,” Hanich said.

The report notes that in 2019 alone, 6.4 million U.S. consumers cut the pay-TV cord, transitioning to OTT streaming and/or broadcast television, both of which continue to rise in adoption and usage.

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Hanich said ongoing changes in accessing entertainment is pushing open ecosystems where consumers can access most streaming services on their device regardless of which platform they decide to use.

“The connected entertainment space is moving towards a smartphone model, in which a handful of platform players control the operating system … and consumer access to services and features,” she said.

Parks: COVID-19 Driving Greater TVOD Use, Piracy Threat

As expected, with greater numbers of households spending time indoors due to the coronavirus, use of home entertainment options such as transactional VOD have spiked.

In the quarter ended March 31, 14% of U.S. broadband households used a TVOD service over the past 30 days, a five-point increase from the previous year, according to new data from Parks Associates. This service type, which includes Amazon Prime Video, FandangoNow, Redbox, iTunes and Vudu, will increase as more content moves online, including early access to theatrical releases such as Universal Pictures Trolls World Tour or The Invisible Man.

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“The idea of streaming current in-theater films was once a concept from a proposed streaming service called The Screening Room,” research director Steve Nason said in a statement. “This service never officially launched, but the COVID-19 pandemic has pushed the concept behind it into reality.”

Nason said the move toward PVOD and shortening of the 90-day theatrical window has been ongoing, but events such as shelter-in-place orders pushed the digital distribution of new theatrical content to the forefront to offset the lost revenue from closed movie theaters.

Parks said the changing distribution tactic is most notable with perennial box office loyalist Disney, which is fast-tracking movies to its SVOD service Disney+. The studio released Frozen II three months before its original planned release and added Onward to the streaming service much quicker than previously anticipated.

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Dallas-based Parks says Disney and other studios are continuing to weigh if they should release new theatrical titles straight to VOD platforms and services or push back these titles so they can premiere in theaters as originally intended, when COVID-19 restrictions are lifted.

Nason contends that studios moving more prime content online earlier, increases the risk of piracy for top-dollar blockbusters. He said early windowed content has always been an issue for studios as thieves would sneak video cameras into theaters to bootleg low-quality copies.

“Now, with releases going digital, pirated video will be higher quality, while consumers might feel emboldened to tap into pirated video since theaters are closed,” Nason said. “This will put more pressure on the antipiracy efforts among video content and service providers.”

Parks: 76% of U.S. Broadband Homes Subscribe to OTT Service

With many parts of the country under quarantine measures due to the coronavirus, new data from Parks Associates finds that about six million households added high-speed Internet service in the first quarter (ended March 31).

In a survey of 10,000 respondents from March 8 and April 3, Dallas-based Parks found 76% of domestic broadband households subscribe to an over-the-top video service, with adoption of online pay-TV services such as YouTube TV, Hulu with Live TV and Sling TV up 12%.

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“We are closely tracking shifts in technology use at home, as shelter-in-place orders have continued as a result of COVID-19,” research director Steve Nason said in a statement. “Consumers are experimenting with watching video on different services and different devices.”

Nason contends consumer sampling of services (i.e., free trials) could lead to reduced spending per month on SVOD services combined, a boost in ad-based VOD services, and shifts in what content consumers are watching.

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Separate data tracking from subsidiary Reelgood of 4.8 million OTT users from March 16 to April 26 found that during widespread stay-at-home mandates, viewers flocked to Netflix, with the most popular shows being “Ozark,” “Money Heist, and “Tiger King.” The most popular movie was Parasite.

In a time of uncertainty, genres such as comedy, faith and spirituality and kids upped viewership with slight declines in horror, war and crime.

Parks said the TV show “Doctor Foster” and the movie Silver Linings Playbook had the most significant jumps in popularity from pre-COVID (February 17 to March 15) to post-COVID (March 16 to April 26).

“One of the biggest shifts — and opportunities — that we’re noticing is the massive spike in children’s content available to stream,” said Catharine Burhenne, head of marketing at Reelgood.

Burhenne says entertainment businesses thriving during the COVID-19 and post-COVID-19 eras will be the ones that can cater their offerings to accommodate the huge appetite for streaming kids content.

“Tubi’s launch of their Tubi Kids app is an example of businesses capitalizing on this opportunity,” she said.

Parks: Americans Value Technology More Than Ever

Sometimes it take crisis to underscore the value of science and technology.

New data from Parks Associates suggests 53% of U.S. broadband households claim they value technology more now than before, following the outbreak of the coronavirus and the resulting social distancing and shelter-in-place orders across the country.

Parks, in an online survey fielded between March 8 and April 3 to heads of domestic broadband households, found that only 28% of seniors aged 75 and older are self-quarantining, while 70% of consumers overall said they are following social distancing rules, and 30% said they are following shelter-in-place orders or are otherwise self-quarantining.

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The report suggests that increased home confinement has resulted in greater awareness and appreciation for technology. Survey respondents said their intention to purchase consumer electronics in the next 12 months has risen 5% compared with the year prior. More than 20% of respondents said they have subscribed to at least one new OTT video service within the past three months.

“2020 marks an unprecedented time in U.S. and global history. COVID-19 has impacted global supply chains, worldwide businesses, and consumer spending,” senior analyst Kristen Hanich said in a statement. “It has prompted exceptional actions from regulators in terms of both public health and monetary and fiscal policy.”

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Parks: One-Third of U.S. Broadband Households Listen to Podcasts Weekly; 9% Subscribe to Online News Service

With millions of people home-bound through work and school due to the coronavirus pandemic, new data from Parks Associates finds 36% of U.S. broadband households listen to podcasts weekly, although the research firm expects patterns of video, music, and news consumption to change dramatically as a result of the current public health crisis.

The study finds that podcasts dealing with video, music and news have a stronger appeal among younger consumers than older consumers and almost half of podcast consumers are heavy users, spending more than five hours per week listening. Podcast users are also very interested in bundling podcast services with video and music.

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The Dallas-based research company reports that in the third quarter of 2019, 9% of U.S. broadband households subscribed to an online news service.

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“While news consumption is going up during the COVID-19 crisis and daily briefings, most online news outlets have provided their coverage free of charge or outside of the paywall, so the number of households subscribing to an online news service will likely not increase as much in the short term,” research director Steve Nason said in a statement. “Long term, we will be tracking consumer trends to see if current events will drive broader online news consumption and subscription habits.”

Parks: TV Antenna Use Expected to Skyrocket as COVID-19 Keeps People at Home

New consumer research from Parks Associates finds that 25% of U.S. broadband households use an antenna to watch local broadcast TV channels, up from 15% in 2018. The Dallas-based firm said that roughly one-half of antenna users do not subscribe to any pay-TV services, either traditional or online TV platforms. The survey, conducted in Q3 2019, found households that watch over-the air TV channels watch more video overall than average broadband households.

“Local news matters to most households [during a pandemic, and] local broadcast channels are the most preferred channel types,” Steve Nason, director of research, said in a statement. “These content preferences shape the access habits of consumers, so antenna usage is increasing as households look to meet these needs, and we will see these trends increase as more shelter-in-place orders take effect and households look for inexpensive content options to offset lost wages.”

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Parks found that 78% of U.S. broadband households watch live TV channels. As households look to cut expenses, their reliance on antennas for information and entertainment will likely increase.

Nason said 30% of domestic broadband households report owning a TV antenna, and Parks upward trends both in ownership and usage to continue, especially the coronavirus public health crisis keeps people at home.

“Penetration of broadcast TV and antennas [has] increased markedly,” he said.

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Survey: 60% of Households Would Cancel Pay-TV Before Broadband

More than three-fourths of U.S. broadband households reported a Parks Associates survey in the third quarter of 2019 that it would be difficult for them to go without broadband service, a finding likely to increase following the widespread COVID-19 outbreak.

The report, 360 View: Broadband Services in the US, also found that 60% of households would cancel their pay-TV subscription before canceling their broadband service.

“Consumers with OTT subscriptions are shifting away from Internet bundles, with this group much more likely to have standalone internet service than non-subscribers,” Steve Nason, director of research, Parks Associates, said in a statement. “This finding indicates providers need to adjust their bundling strategies, to include more OTT video services as options. Currently less than one-fifth of subscribers receive an OTT service bundled with their broadband package.”

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The research also showed that consumers have little understanding of how much broadband speed their home needs and uses. Demographic factors, such as age, rather than the number of connected platforms in the home, largely determine the choice of broadband speed. Demand for 1+ Gbps services is highest among younger consumers who use connected platforms and services heavily. As social distancing and self-isolating habits increase across the country, the demand for these higher-speed services could spike across all demographics and households, according to Parks.

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“Current conditions, with many people working at home and entertaining-in-place, put more stress on the home’s broadband capacity, so service providers need to step up their efforts to help customers better understand their throughput needs,” Nason said in a statement. “Customers will be more willing to upgrade their speed to match their increased consumption habits, provided they get the right information and assurances it will meet their needs, which will ultimately lead to higher satisfaction levels.”

Parks: Industry Awards Boost SVOD Platforms

Everyone loves a winner. New research from Parks Associates suggests over-the-top video services — and their large slate of original programming — will benefit as their recognition during awards season in video entertainment continues to expand.

For this year’s Golden Globes, Netflix, Hulu and Amazon earned a total of 47 nominations, nearly double the 25 they received last year, with the three services winning two awards each.

“Apple TV+ streaming service found success with its flagship series ‘The Morning Show,’ starring Jennifer Aniston, Reese Witherspoon and Steve Carell, which won awards from the Screen Actors Guild (SAG) and Critics’ Choice Award,” analyst Steve Nason said in a statement. “These accomplishments mark Apple TV+’s first industry awards since its launch in November 2019.”

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Nason said awards recognition brings legitimacy to a platform’s original content and can be a significant boost, especially in the early days after its launch.

“Such recognition certainly helped Netflix when the company first ventured into original content, and now the service scored 24 Oscar nominations this year, led by The Irishman and Marriage Story.”

Netflix’s long-term investment in premium original content has helped the service become very difficult for consumers to relinquish, according to Parks.

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Among Netflix subs, 64% feel it would difficult to give up the service, including 47% who feel it would be “very difficult,” the highest among top OTT video services measured by the Dallas-based research company.

Parks finds that as of Q3 2019, pay-TV and OTT services reach roughly the same number of consumers — around 72% of U.S. broadband households. Pay-TV’s long-reigning dominance has dwindled as the OTT video service market booms.