Netflix Projected to Reach 201 Million Subs by 2023

Netflix is projected to top 201 million subscribers globally by 2023, according to new data from Digital TV Research. Netflix ended the first quarter (ended March 31) with 125 million subs, with company projections of more than 131 million subs by the end of June.

Netflix is anticipated to add 28 million subs in 2018 – representing the SVOD pioneer’s largest growth-year ever.

London-based Digtial TV Research said Netflix subs would top 77 million in North America by 2023 – which is nearly 20 million more than Netflix’s internal projection for the United States through June 30, excluding Canada.

“These forecasts are a lot higher than the last edition of this report,” Simon Murray, principal analyst at Digital TV Research, said in a statement. “Similar to many other analysts, we underestimated [Netflix’s fast] take-up in international markets.”

Indeed, North America and Western Europe will together supply 62% of Netflix’s total sub base by 2023 – still dominant, but down from 76% in 2017. Asia Pacific will account for 14% of the 2023 total. This represents 28 million subs; quadruple the 2017 figure.

The top five countries (U.S., U.K., Brazil, Canada and Germany) will supply 53% of Netflix’s subs by 2023; down from 69% in 2017. Although the number of international subs overtook domestic subs in 2017, the U.S. will still contribute 44% of subs by 2023 – and will add 16 million subs between 2017 and 2023.

SVOD revenue will climb from $11.3 billion in 2017 to $28.8 billion in 2023. The top five countries will generate revenue of $16 billion in 2023 – or 56% of Netflix’s global subscription revenue. The U.S. will contribute $11.2 billion, with four other countries above $1 billion.

Parks Associates Research Shows 6% of U.S. Broadband Households Likely to Subscribe to Online Pay-TV Service in Next Year

New research from Parks Associates shows that 6% of U.S. broadband households are highly likely to subscribe to an online pay-TV service within the next 12 months, which would more than double the number subscribing today.

“In 2017, 14% of non-pay-TV households were planning to subscribe to a service in the next 12 months, a notable increase from 2015 and 2016,” said Brett Sappinton, senior director of research, Parks Associates, in a statement. “Over 60% of these households are planning to subscribe to an online pay-TV service, either standalone or as part of a service bundle, so consumers are showing a willingness to test alternate pay-TV offerings.”

“Currently, 78% of broadband households subscribe to a pay-TV service, and 5% of pay-TV households subscribe to an online pay-TV service. These solutions include services such as Sling TV, DIRECTV Now, PlayStation Vue, YouTube TV, Hulu with Live TV, or FuboTV,” Sappington said in a statement. “While OTT gives subscribers the opportunity to pick and choose single services, it is easier for them to manage a single bundle. Desire for this convenience will continue to drive interest in online pay-TV services, provided they hit the right price point and deliver the desired content channels.”

Additional Parks Associates findings include:

  • Use of an OTT service in a household correlates positively to high intent to upgrade broadband service.
  • Approximately 33% of cord cutters would have stayed with their service provider if offered a Netflix-style service bundled with broadcast TV channels.
  • 5% of U.S. broadband households have never subscribed to a pay-TV service.
  • 8% of U.S. broadband households have recently downgraded their pay-TV service and supplement viewing with video on an internet-connected device.

Research: Sports Main Reason 27% of Pay-TV Subscribers Say They Subscribe

Sports programming is the primary reason 27% of U.S. pay-TV households say they subscribe to their pay-TV service, according to new research from Parks Associates.

“While broadcast and pay TV remain key sources for live sports, OTT streaming options have become an important part of the live sports landscape,” said Brett Sappinton, senior director of research, Parks Associates, in a statement. “Increasingly, leagues and networks are offering direct-to-consumer options. These services offer access to content that would otherwise not be broadcast and subscription options to those not subscribing to pay TV. In the past several weeks, both CBS and ESPN have launched their own streaming services for sports content. These services will both compete with and complement major services such as WWE Network and MLB.TV. Over time, pay-TV providers will likely partner with these types of services in order to round out their existing channel packages.”

Parks Associates has also found 52% of U.S. broadband households have a subscription to both pay-TV and one or more OTT video services; 10% of U.S. broadband households have switched, downgraded, or cancelled their pay-TV service in the past 12 months; and U.S. broadband households spend $23 on average for video entertainment per month.

Report: Pay-TV Subscriber Declines Not Unique to U.S.

Cord-cutting trends that continue to undermine the pay-TV ecosystem are not confined solely to the United States. Pay-TV subs fell in 13 other markets worldwide as consumers increasingly favor over-the-top alternatives such as online TV and subscription streaming video, according to new data from IHS Markit.

The markets that saw pay-TV subs decline in 2017 include Brazil, Mexico, Hong Kong, Canada, Sweden, Denmark, Japan, New Zealand, Norway, Singapore, Israel, Venezuela and Ireland.

“The cord-cutting woes of pay TV companies in the U.S. have been well publicized,” Ted Hall, director of research for TV and video, said in a statement.  “Although the rest of the world has been broadly resisting the trend, other markets have also experienced pay TV subscription losses.”

In eight countries — the U.S., Brazil, Mexico, Sweden, Japan, New Zealand, Norway and Venezuela — operators were able to compensate for sub loses by increasing ARPU (average revenue per subscriber) revenue from remaining subs. Even in the U.S., where 3.3 million pay TV subs were lost in 2017, operators upped revenue largely through price hikes.

Latin America experienced its first net decline in pay-TV subs since 2002 last year, with cord cutting contributing in part to decreases in two major markets. Brazil lost 617,000 pay TV subscriptions, while Mexico declined by 192,000, as economic difficulties also took their toll. Meanwhile, Venezuela’s pay TV market lost 16,000 subscriptions, as the country’s financial crisis worsened.

With a net loss of 3.5 million subs, North America suffered its biggest-ever annual pay TV decline in 2017. Between 2012 and 2017, subs fell by 7.1 million in the region. Meanwhile, net additions for Netflix and other over-the-top subscription video services totaled 101.3 million over the same period, with more than 26 million OTT subs added in 2017.

The cord-cutting trend has been most strongly associated with cable TV, but satellite TV is also struggling in several regions. It declined more than any other platform in both North America and Latin America in 2017, suffering net losses of 1.8 million and 882,000, respectively.

“[Indeed], a growing number of pay-TV operators are launching their own standalone streaming services to compete directly with Netflix, Amazon Prime Video and other OTT video companies,” Hall said. “These [online TV] alternatives … are more flexible and typically priced lower than operators’ core offerings.”

Hall warned that relying upon online TV, which generated a fraction of the revenue from pay-TV, represent a partial solution at best.

“These services have lower [ARPU] and are therefore worth less to operators,” he said.

IHS Markit anticipates further cord cutting in North America, with a net decline of 8.5 million subs anticipated through 2022. Latin America is expected to return to growth, as Brazil continues on the path of economic recovery.

Elsewhere in the world, alongside the growth of pay TV subscriptions in most regions, the surge in online video will continue unabated. Over the five years to the end of 2022, OTT net additions are expected to outstrip those of pay TV everywhere except the Middle East and Africa, where pay TV will grow faster. In total, 409 million OTT video subscriptions will be added globally over the forecast period, with almost two-thirds to come from Asia Pacific.

Film Enthusiast’s Release Report Chronicles Two Decades of Disc, Home Entertainment Industry

It is a statistic perhaps only Ralph Tribbey might notice.

The theatrical-to-disc window of top films would break the 100-day mark for the first time in more than two decades this June.

“On June 12, the 52-week moving average of films grossing $25 million or more at the box office will pierce the 100-day mark for the first time in the 22-year history of the DVD format,” Tribbey wrote in a Special Report edition of the DVD & Blu-ray Release Report that he has been producing for more than two decades.

“That’s the first time that we’ve cracked it,” Tribbey said. “I think that by year-end we could be pushing 95 days.”

It’s a statistic that it particularly important to theatrical distributors that have been under siege from digital services such as Netflix, which has been releasing its films online at the same time they hit theaters. The faster films hit aftermarket distribution, the shorter the time theaters have to capitalize on content income.

“I think digital is driving the marketplace,” Tribbey said, noting there has been a “breakup of traditional distribution patterns.”

Beginning in 2016 the studios collectively began to move things through the pipeline much faster, Tribbey noted.

“They’re squeezing the theatrical to a point where theatrical will be squeezed to the point where it doesn’t make any sense anymore,” he opined.

Tribbey is in a unique position to observe these changes. A native of Los Angeles, after studying economics, he took a job offer as a business analyst for Dun and Bradstreet in San Diego, but soon realized his passion was theatrical exhibition and changed careers. During the early 1970s he worked for Loews Theatres, General Cinema, National Cinema and Great Western Theatres. By 1975 he was running a six-theater chain in partnership with future film producer Steve Lane (The Howling, Lawnmower Man) in San Diego and Orange Counties, which included the arthouse venues, The Strand in Ocean Beach and The Balboa in Newport Beach. During that time, he brought The Rocky Horror Picture Show midnight screenings to San Diego and Orange counties. The chain also operated two first run theaters in Escondido, which Tribbey said proved to be too successful for the larger chains to ignore, as they began building larger theaters and squeezed his independent chain out.

During the period, he opened the second video rental store — after Barry Rosenblat’s Video Library — in the city of San Diego (in a small outlet adjacent to The Strand). This small video retail outlet introduced him to local distributor Herb Fischer and a life-long personal and business relationship followed.

The transition from theatrical exhibition to home entertainment included VP of operations for Jim Lahm’s Orange County-based Video Crossroads, the publishing of close to 100,000 poster-sized newsletters for independent video rental outlets each month, a year and a half as managing editor of American Video Monthly Magazine, the designer and publisher of Coast Video Distribution’s monthly mailer, and marketing for Key Video, a subsidiary of 20th Century-Fox, with Herb Fischer as the president.

As entrepreneur with many hats, he jumped at the chance to take over marketing for Metro-Goldwyn-Mayer’s MGM/UA Home Video label in 1987.  He worked alongside former Sony Pictures Home Entertainment president David Bishop at MGM (1987-1990); he was VP of marketing while Bishop was VP of sales. He left MGM when Kirk Kerkorian sold the company to Giancarlo Parretti.

Following his stint at MGM, he served as SVP of marketing for replicator MediaCopy for three years, followed by marketing consulting positions simultaneously with Cabin Fever Entertainment and Orion Pictures. It was during this period that the DVD format was being developed and Tribbey said it then occurred to him that there might be a business in tracking and reporting on DVD releases and patterns.

Tribbey thought, “Why not track DVD from day one and see how it develops?”

He made up his mind to follow the data when Cabin Fever and Orion were both sold within a 48-hour period. Thus, in 1997 he launched the DVD Release Report (later called the DVD & Blu-ray Release Report to accommodate a new disc format). For 22 years, Tribbey has tracked box office take, disc release dates, retail prices and other data for the home entertainment business.

In the process, he’s noted various changes.

“There was the huge rush from 2000 to 2006 where the format took off,” he said. “Everybody was on board. Everybody was converting their libraries to DVD.”

Then he found that Blu-ray Disc peeked as digital delivery exploded.

Now, manufactured-on-demand discs are beginning to dominate.

“I think this year, we will have more MOD SKUs released than manufactured SKUs,” he said, adding MOD dominates “deep catalog, special interest, foreign-language and obscure titles.”

In his spare time, Tribbey is working on books, including one on the chronological theatrical release history of horror, sci-fi and fantasy films of the 1950s, ‘60s and ‘70s.

“It’s fun,” he said.

But he’s still a big proponent of disc.

“For things that you want to keep, I think hard copy is the way to go,” he said.

Report: 4K UHD Demand to Boost TV Growth in 2018

Consumer demand for TV sets is poised to return to growth in 2018, boosted by 4K Ultra HD models, according to the latest “Worldwide TV Market Report” from Futuresource Consulting.

The recovery of several markets linked with a transition to 4K UHD models will push the market up by 5% to $85 billion, according to Futuresource.

“We believe 4K UHD TV sets will ship over 100 million units this year, equivalent to two-thirds of the entire large screen market,” said David Tett, market analyst at Futuresource Consulting, in a statement. “Consumers increasingly want larger screens, and this is playing nicely into the 4K UHD proposition.”

The world’s two largest markets, China and the United States, both saw falls in 2017 but have a positive outlook in 2018, Futuresource projects.

“They have been ahead of most other markets in terms of adoption of 4K UHD and large screens generally. Over three quarters of sets that sell in the U.S. and China this year will be over 40 [inches],” said Tett in a statement. “However, other regions are now catching up, and Western Europe is on course to match the 44% Chinese household ownership of 4K UHD TVs by 2022.”

With a substantial installed base of 4K UHD TV households to target, content is now becoming available across markets, according to Futuresource.

“Consumer research shows that there has been a significant step-up in the proportion of 4K UHD TV owners who say they have watched this content at home,” Tett said in a statement. “This is the result not just of an expanding number of SVOD subscribers, but also a growing choice of content via linear TV.”

Big premium TV vendors are increasing using voice assistant platforms to attract consumers, according to Futuresource. Google Assistant and Amazon’s Alexa are being incorporated into the latest TVs from LG, Hisense, TCL and Vizio. Samsung, meanwhile, is utilising its in-house Bixby assistant in its 2018 QLED range.

Also, in pursuit of better margins, most vendors have introduced either QLED or OLED display technology to larger screens, according to Futuresource.

“The two largest TV vendors are currently on opposing sides; Samsung is the driving force behind QLED and LG is OLED’s primary backer,” said Tett in a statement.

Futuresource expects a 41% CAGR between 2018 and 2022 of these technologies, resulting in around 8 million sets shipping in 2022.
Among other findings, Futuresource expects high dynamic range (HDR) to be present in 60% of 4K UHD sets this year. HDR 10 is the most commonly found solution currently across vendors but the availability of a range of technologies including HDR10, HDR10+, HLG, Advanced HDR and Dolby Vision is leading to some consumer confusion, according to Futuresource.

Research: U.S. Pay-TV Affordability Has Dropped Since 2000

Consumers who complain about their cable bill may have good reason.

Multichannel video affordability in the United States has plummeted since the turn of the millennium, squeezing the penetration rate, particularly among the more economically vulnerable households, according to new data from Kagan, S&P Global Market Intelligence.

Since 2000, there has been a 74% increase in the inflation-adjusted pay-TV bill while incomes have stagnated, according to the research.

The estimated nominal average monthly multichannel revenue per subscriber across the cable, DBS and telco platforms rose at a 5.5% CAGR between 2000 and 2017. Kagan calculated U.S. multichannel purchasing power based on 2017 inflation-adjusted annual multichannel average revenue per user, or ARPU, and average income figures. The affordability calculation dropped from a 10 in 2000 to a 6 in 2017.

Multichannel offerings have evolved a great deal since 2000, including a greater number of networks and advanced services such as video on demand, DVR services and improved user interfaces, with the vast majority of the packages delivered to subscribers digitally and in HD, but consumers’ ability to pay the price for that improvement didn’t grow much.

“The eroding legacy multichannel affordability partly explains the popularity of over-the-top services such as Netflix Inc. and Amazon.com Inc.’s Prime Video,” according to Kagan.

Wiener Named CEO of comScore

ComScore board member Bryan Wiener CEO will become the research firm’s new CEO starting May 30.

Wiener brings more than 25 years of leadership experience in the media and technology industry. Most recently, he served as executive chairman at 360i, a 1,000-plus-employee advertising agency.

With the appointment of Wiener as CEO, Bill Livek, comScore’s current executive vice chairman and president (and former CEO of Rentrak), will transition to the new role of vice chairman of the board and special advisor to the CEO.

The CEO position at comScore has been unoccupied since former CEO, Gian Fulgoni, retired in November 2017.

“Bryan is a universally-respected change agent in the business world, known for specializing in growing companies into market leaders, and I am thrilled to welcome him to the comScore executive team,” said Livek in a statement. “Over the past six months, I’ve gotten to know Bryan well and believe deeply in his vision for comScore, as well as in his ability to inspire our existing workforce and secure new talent to support the evolving needs of the company.”

“I’m energized by the opportunity to join comScore during this pivotal moment for our business and our industry,” said Wiener in a statement. “In a world where people are increasingly consuming media across platforms, the need for a trusted, objective and consistent currency to measure audience and advertising ROI only grows. comScore is uniquely positioned to provide this new model, as it has the scalable data, technology and history of innovation to power the industry’s future.”

In addition to the CEO appointment, comScore is announcing changes to its board of directors, effective immediately. Rob Norman, an advisor to media and marketing companies and former chief digital officer of WPP’s media investment group GroupM, has been named to comScore’s board of directors. Current board member Brent Rosenthal has been named non-executive chair.

“This is an incredible time to be at the nexus of media innovation and I am excited to join comScore’s board of directors to provide guidance at this important moment,” said Norman in a statement. “I’ve known Bryan for more than a decade and believe his vision and proven leadership style are exactly what is needed to cement comScore as the unequivocal leader in cross-platform measurement.”

“I thank the Board for this incredible opportunity and I look forward to working closely with Bryan and our strong Board to capitalize on comScore’s unique market position. Additionally, I want to thank Bill Livek for his years of executive leadership and know that he will continue to have an enormous impact on comScore in his new role,” said Rosenthal in a statement.

Parks Associates: U.S. Broadband Households’ Average Monthly Spending on Non-Pay-TV Video Entertainment Drops to $23

U.S. broadband households report their average monthly expenditure on video entertainment outside of a pay-TV subscription has dropped from $29 in the past two years to $23 in the last half of 2017, according to research from Parks Associates.

Spending on internet video has held steady at roughly $9 per month for several years, while reduced spending on cinema tickets and DVDs and Blu-ray discs contributed significantly to the overall decline, according to the research.

Parks Associates released two new studies—360 View: Digital Media and Connected Consumers and 360 View: Access and Entertainment in U.S. Broadband Households—which also show a decline in multiplatform usage among households, as use rates on individual screens declined despite the fact that overall video viewing has held steady.

“The number of overall consumers viewing video on a connected device remains steady at 92% of U.S. broadband households, but viewers are using fewer devices to access that content,” said Parks Associates senior director Brett Sappington in a statement. “This finding indicates that consumers are starting to settle into particular viewing habits. They are focusing more on their favorite screen and connected devices and are reducing time spent on other video screens.”

The research firm also noted that many viewers want access to their OTT services through their pay-TV set-top box. Currently, one-fifth of pay-TV subscribers have the ability to access online video services through their set-top box, and one-third of pay-TV subscribers say access to OTT via a pay-TV user interface or channel guide is appealing.

“Users are experimenting less with multiple connected devices, but they continue to experiment with multiple OTT video services,” said Parks Associates research analyst Hunter Sappington in a statement. “Many consumers now see OTT video as complementary to both other OTT video services and pay-TV services, rather than a replacement. Today’s OTT market is much more about bundling and partnerships than it is about winning subscribers from direct competitors.”

Other highlights of Parks research include:

  • The increasing number of partnerships between pay-TV and OTT providers is driving the number of U.S. pay-TV households subscribing to an online video service through their pay-TV provider from 10% a year ago to 21% now.
  • Households watch an average of 14.6 hours per week of video on a TV screen.

Parks Associates will address the changing dynamics of the pay-TV market at a research workshop, Survivor’s Guide to the New Video World, May 14 in Denver at the Pay TV Show, hosted by FierceMarkets.

MPAA Report: Worldwide Consumer Theatrical and Home Entertainment Spending Reached $88.4 Billion in 2017

Consumer spending for the combined theatrical and home entertainment markets reached $88.4 billion worldwide, according to new theatrical and home entertainment data released by the Motion Picture Association of America (MPAA).

The global box office reached a new record high of $40.6 billion in 2017 – up 5% from the previous year. Home entertainment consumer spending also increased globally in 2017 to hit $47.8 billion, up 11% from 2016.

That’s according to the 2017 Theatrical and Home Entertainment Market Environment report, or THEME, which includes new information on the home entertainment market in addition to global box office figures and a moviegoer demographic survey.

“With more stories and more storytelling mediums than ever, our industry continues to adapt to an ever-changing world,” said MPAA chairman and CEO Charles Rivkin. “The global entertainment market is expanding on multiple fronts, constantly innovating to deliver an unparalleled experience to audiences worldwide. In 2017, not only did the global box office hit yet another record high, the number of subscriptions to online video services around the world jumped 33 percent to reach 446.8 million.”

“With the global box office continuing to grow and movies drawing younger, more diverse audiences, we see a bright future for theatrical entertainment,” said John Fithian, president and CEO of the National Association of Theatre Owners (NATO). “We are relentlessly innovating, investing in top-notch cinema infrastructure and advanced technology, to give audiences the very best movie experience.”

In 2017, global home entertainment consumer spending increased by 11% to $47.8 billion, and in the United States, the home entertainment market increased 5% from 2016 to $20.5 billion. Other findings:

  • The number of subscriptions to online video services around the world grew to 446.8 million in 2017 – a 33 percent increase compared to 2016.
  • Online video content viewing in the United States continued to increase in 2017, reaching 167.5 billion views and transactions – a 41 percent jump compared to 2016.
  • Americans now spend 49 percent of their media time on a digital platform.

 

The global box office’s record high was driven by a 7% increase in international markets ($29.5 billion), in large part due to growth in China. Japan, the United Kingdom, India, and South Korea rounded out the top five international markets after China. Cinema screens increased 8% globally in 2017, reaching just over 170,000, led by continued double digit growth in the Asia Pacific region (up 16%).

In the United States and Canada, while the domestic box office did not quite reach last year’s record of $11.4 billion, it matched 2015’s previous high of $11.1 billion. Other domestic findings include:

  • More than three-quarters of the population (263 million people) went to the cinema at least once last year.
  • The gender composition of this audience was even among men and women – 50-50.
  • More young people and diverse populations went to the movies in 2017. Audiences between the ages of 12 and 17 attended an average of 4.9 movies over the course of the year – more than any other age group, and closely followed by 18 to 24 year olds (4.7).
  • Per capita attendance was highest among Latino (4.5) and Asian (4.3) audiences.