Report: Global SVOD Subscription Growth Topped Record 217 Million in Q3

Worldwide demand for subscription streaming video shows no sign of slowing. New data from Strategy Analytics found global growth in SVOD subscriptions reached a record 217.6 million in the third quarter, ended Sept. 30. The previous record stood at 211.7 million new subs in Q4 2018. Total SVOD subs approached 770 million, up 39.4% from 551.1 million subs in the previous-year period.

Major drivers included Netflix and Disney, with the two services combining for more than 250 million subs.

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“Until early 2020, it looked like the SVOD growth curve was heading toward a plateau, but the annual growth rate has actually been accelerating during the past twelve months,” Michael Goodman, director of TV and media strategies, said in a statement.

The report found that while Netflix remains the clear market leader, its share of SVOD subscriptions continues to fall as new entrants arrive. The explosive growth of Disney+ has helped the platform reach the No. 2 position worldwide.

“This evidence confirms that the transformation of TV is well under way,” added David Mercer, VP and principal analyst. “SVOD services are playing a key role in changing the way people watch TV, and we expect hundreds of millions of homes worldwide to move away from traditional broadcast and pay-TV over the coming decade.”

Report: Streaming Media Devices Top 1.1 Billion

The rise of over-the-top video distribution, including Netflix, Amazon Prime Video and Disney+, has pushed the global number of streaming video devices (including connected TVs) in homes past 1.1 billion, according to new data from Strategy Analytics. The finding from 27 countries underscores the role of television manufacturers in OTT video distribution in homes.

Samsung tops the market with 14% of devices in use, followed by Sony (12%), LG (8%), Hisense (5%), TCL (5%) and Amazon Fire TV (5%). It follows then that Samsung’s proprietary operating system (Tizen) accounts for 11% of deployed devices, followed by WebOS (7%), PlayStation (7%), Roku OS (5%, Amazon Fire OS (5%), Android TV (4%) and Xbox (4%).

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The research highlights the fact that streaming video is increasingly viewed on TV screens rather than mobile devices, particularly during the ongoing coronavirus pandemic, and connected TVs have become a leading platform in video streaming.

“Over-the-top TV and video streaming to the TV is a complex and evolving landscape compared to mobile devices, where only two platforms dominate,” David Watkins, director at Strategy Analytics, said in a statement.

David Mercer, VP of media and intelligent home at Strategy Analytics, said that as pay-TV declines, so too will traditional television and video platforms. TV streaming, Mercer says, represents the future of television and video.

“Over the next decade or so we expect Internet streaming to dominate consumption of television and video content across much of the world,” he said. “This research reflects the early stages in the evolution of the platforms which will come to dominate this ecosystem for many years to come.”

Report: Netflix, Hulu Usage Declined as COVID-19 Quarantine Measures Relaxed

The re-opening of the economy from the coronavirus pandemic shutdown could be having an adverse effect on subscription streaming services such as Netflix and Hulu.

New data from Strategy Analytics finds the surge in users of SVOD services during the stay-at-home period was not always sustained once people were allowed to move around more freely.

The report, citing a nationwide survey of more than 4,000 U.S. adults in March, April and May found that 42% of respondents used Netflix in May, compared with 50% in April and 47% in March. User numbers of other services, including Amazon Prime Video, Hulu and Disney+, followed a similar “pandemic peak” pattern.

The results suggest that significant numbers of users were binging on services in March and April but as restrictions were loosened in May the number of users declined as they were able to pursue more normal activities once again. This did not apply to all services, however: The number of users of both Apple TV+ and CBS All Access rose in both April and May.

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Surveys in the U.S. were fielded online March 21-22 (sample size of 1,444),  April 21-22 (1,220) and May 22-24 (1,270) and used a nationally representative sample of adults aged 18+.

“Ironically Netflix may have suffered through being the most popular SVOD service, since it appears to have attracted many new but ultimately temporary users during the pandemic,” Michael Goodman, director of TV and media strategies, and the report’s author, said in a statement.

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Goodman said Netflix Q2 fiscal results next month would be “watched with interest” to see whether the streaming behemoth’s strong Q1 performance is sustained into Q2.

“We still believe that Netflix numbers will exceed expectations overall during 2020, but now that the pandemic impact is waning, the company will face more-traditional challenges associated with customer retention, win-back and targeting the right content to appropriate interests and demographics,” Goodman said.

David Mercer, VP of media and intelligent home, said it’s not surprising that there was a spike in demand for video services as many people were stuck at home for several weeks. SVOD services, he said, have benefited to varying degrees, and must all now focus on retaining customers who joined recently as well as ensuring that their content development strategies are on track.

“This will prove challenging for many players, given the continuing crisis in video production as a result of COVID-19 restrictions,” Mercer said.

Coronavirus Quarantines Expected to Up Global SVOD Subs 5% In 2020

With an increasingly captive audience due to quarantine efforts worldwide to halt the spread of the coronavirus, new data from Strategy Analytics contends the forecast for global streaming video subscriptions will increase by 5% in 2020.

The London-based research firm now projects 949 million paid subscriptions globally by the end of 2020, an increase of 47 million from earlier forecasts.

Longer term, the forecast predicts that paid SVOD subscriptions will grow by 621 million between 2019 and 2025, reaching 1.43 billion. Currently, China and the United States combined account for nearly two-thirds (65%) of paid SVOD subscriptions globally, however, as these markets mature and approach market saturation and paid subscriptions, particularly in Southeast Asia grow, their share of global SVOD subscriptions will fall to 55% in 2025.

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“One significant factor affecting future SVOD growth is the impact of the coronavirus in both the short and long term,” Michael Goodman, director of TV & Media Strategies, said in a statement. “In the near term the coronavirus will actually boost SVOD subscriptions, as well as viewing of these services, as an ever growing number of consumers adopt social distancing or are forced into quarantine.”

Goodman said long-term effects of the virus on SVOD depend on the length of the pandemic and resulting economic damage. As businesses shut down and individuals are laid off consumers will alter how they spend money on essential and non-essential services.

Strategy Analytics said China would remain the largest SVOD market with 438 million paid subs in 2025, up from 131 million from 2019. The U.S. will follow with 342 million subs, up from 125 million from 2019.

With nearly three-quarters of U.S. TV households subscribing to one or more SVOD service the domestic SVOD market is becoming saturated, according to Goodman.

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“With U.S. SVOD households continuing to add additional services such as CBS All Access, Disney+, and the soon-to-launch HBO Max, the total number of SVOD subscriptions in the U.S. will continue to grow,” he said.

Report: U.S. Dominates Global SVOD Revenue

While SVOD services around the world continue to add subscribers, revenue continues to be largely driven by the United States — birthplace of the distribution channel created in 2007 by Netflix and Roku.

According to new data from Strategy Analytics, consumer spending in 2019 on SVOD services globally was $53.34 billion, with the U.S. generating 43% ($22.93 billion) of the revenue, followed by China (17%, $9 billion), Germany and the United Kingdom at 4% each ($2.13 billion). Overall, the top 10 countries represented 81% of consumer spending on SVOD services.

The report suggests that by 2025, SVOD consumer spend worldwide will grow to $102.86 billion, with the U.S. accounting for 44%, followed by China (15%), and Germany (5%).

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Strategy Analytics suggest reasons for U.S. domination in SVOD revolve the fact that U.S. TV households are more likely to subscribe to SVOD than those in other countries. In 2019, 74% of domestic TV households subscribed to one or more SVOD service. In comparison, the global average was 32%.

On average, U.S. SVOD households are more likely to subscriber to multiple services than their counterparts in other regions. On average, domestic households subscribed to 2.45 SVOD services in 2019, by 2025 this will grow to 3.21. In comparison, SVOD households globally subscribed to 1.54 SVOD services in 2019, by 2025 this will grow to 1.82.

“Whether it is pay-TV, video rental and sell-thru, or subscription VOD, U.S. consumers have historically shown a willingness to spend on these products and services at a far greater rate than those in the vast majority of other countries,” Michael Goodman, director, TV & media strategies, said in a statement.

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Goodman said local and regional SVOD services globally must be “realistic” about potential of SVOD revenue and not base their business models on U.S. levels of demand.

Indeed, SVOD services tend to be more expensive in the U.S. than in other countries, according to the report. Globally, the average spend per SVOD service in 2019 was $6.24, in the U.S. the average was 63% higher at $10.22 per SVOD service. Given that each SVOD household in the U.S. subscribes to multiple services, they spent an average of $22.52 per month compared to $9.26 globally.


Analyst: SVOD Growth Leading to Media Consolidation

The subscription streaming video market has just expanded with the inclusion of Disney+ and Apple TV+ into a market controlled by Netflix, Amazon Prime Video and Hulu. And next year includes the addition of HBO Max and NBC Universal’s Peacock.

Heading into 2020, new projections from Strategy Analytics Television & Media Strategies suggests the SVOD market will consolidate with third-party traditional media companies eyeing a seat at the table through mergers and acquisitions.

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The London-based research firm says traditional domestic pay-TV operators will lose nearly 9% of their subscriber base in 2020 with third-party media companies eyeing mergers and acquisitions to remain relevant.

“As a result of the proliferation of broadband and connected devices consumers have more choices than ever in how, when, and where they connect with movies, TV, music, and games,” Michael Goodman, director, digital media strategies, said in a statement. “As consumer adoption of online alternatives grows the degree of disruption felt by traditional distribution models is accelerating.”

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Research: Amazon Prime, Hulu Users More Likely Than Netflix Users to Discuss Technical Problems, Dissatisfaction

Users of Amazon Prime Video and Hulu are much more likely to discuss technical problems and dissatisfaction with content than Netflix subscribers, according to a new report from Strategy Analytics.

The report “Voice of the Customer: What Are Netflix Subscribers Saying Compared to Competitors?” found that Netflix users were much more likely to spend time discussing characters and storylines in great detail, suggesting high levels of engagement with Netflix shows. By contrast, discussions involving Hulu users focused on resolving problems with the service, while Amazon users focused on negative comments to do with pricing and lack of content choice.

“The report concludes that Hulu and Amazon must address these deficiencies if they are to make inroads into Netflix’s leadership position,” according to the Strategy Analytics press release. “The findings should also serve as a warning to Disney and WarnerMedia as they prepare to launch new streaming services.”

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The research, which is based on “advanced language analytics techniques,” according to the firm, showed that, compared to Hulu and Amazon, Netflix users were much more likely to discuss binge-viewing; characters, scenes and storylines in great detail; evaluating shows, both positively and negatively; what people in general think of shows; and worrying about seeing spoilers before watching shows.

“Netflix’s advantages are numerous, but lie primarily in the fact that its users are much more engaged with the content than those using Amazon Prime Video or Hulu,” said Michael Goodman, director, TV & media strategies, at Strategy Analytics, in a statement. “Neither Amazon nor Hulu have managed to get much beyond technical or pricing issues in order to build that all-important content-viewer relationship which ensures higher retention levels and sustained subscription revenues.”

The research was carried out by Relative Insight in partnership with Strategy Analytics. Relative Insight is a U.K.-based language understanding technology company.

Roku Remains Top Streaming Media Device in U.S.

Roku’s streaming TV platform accounted for more than 30% of U.S. sales of connected TV devices in Q1 2019, further increasing its lead in streaming TV platforms, according to the latest data from Strategy Analytics.

The British research firm finds that there are more than 41 million Roku-based devices in use, including branded set-top devices, HDMI sticks and smart TVs, accounting for 15.2% of all media streaming devices.

Roku now has a 36% lead over the next major platform, Sony PlayStation, in terms of devices in use. The report predicts that this lead will stretch to 70% by the end of the year, largely as a result of the success of Roku’s smart TV partner strategy.

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Other key findings from the report include:

Amazon’s Fire TV OS was the second-most-sold streaming TV platform in Q1 2019, with 12% of sales, followed by Samsung’s Tizen at 11% and Google (Android TV and Chromecast) at 9%

By the end of 2019 more than 52 million Roku-powered devices will be in use, accounting for 18% of all connected media devices

“Roku had another strong quarter in Q1 and continues to hold a commanding lead in streaming media platforms in spite of Amazon’s growing influence in the living room,” David Watkins, director at Strategy Analytics and the report’s author, said in a statement.

Watkins said Roku’s firs-mover status (it co-pioneered subscription VOD with Netflix), content offering of third-party streaming services, comprehensive search function and simple and intuitive user interface have contributed in its success.

The analyst cautioned Roku is less well-known outside of the U.S. and to succeed on the international stage would need to “face down” the challenges of building brand awareness and drawing users away from well-established players such as Amazon, Apple and Google.

“There was record growth in the smart TV market in the first quarter of 2019 and Roku and TCL have proved to be a great partnership in this rapidly growing segment,” added David Mercer, principal analyst at Strategy Analytics. “Roku is set to become the U.S.’s top smart TV platform this year in terms of sales share, and Google and Amazon clearly have their work cut out to stay in touch with the market leader.”

Research: Number of Global UHD TV Homes Passes 200 Million

The number of homes worldwide using an Ultra HD TV has now passed the 200 million mark, according to the latest research from Strategy Analytics’ Connected Home Devices service.

The report, 4K and 8K Ultra HDTV Global Market Forecast, predicts that 222 million homes will own an Ultra HD TV by the end of 2018, an increase of nearly 50% over the past twelve months. The report also forecasts that more than 600 million homes will own an Ultra HD TV by 2023. The vast majority of these homes will have a 4K display — only 3% of Ultra HD TVs in use will be 8K-ready by this time.

Other key findings from the report include:

  • North America will continue to lead in adoption of Ultra HD TVs, with 71% of homes owning one by 2023;
  • The largest market in terms of annual sales of Ultra HD TVs is the Asia Pacific region, where they will reach nearly 46 million units this year;
  • Sales of 8K Ultra HDTVs will reach more than 400,000 units in 2019 and more than 11 million by 2023, which will represent a 6% share of the total Ultra HD TV market; and
  • By 2023 3.9% of Ultra HDTV homes in North America will own 8K displays, compared to 4.1% in Asia Pacific and 1.7% in Western Europe.

“The success of Ultra HDTV has been driven by technology adoption rather than content and services,” said David Mercer, principal analyst and the report’s author, in a statement. “4K video and TV services are now becoming more widely available, meeting the expectations of 4K Ultra HDTV owners for the best quality TV experience. But our expectations for 8K services should be cautious: while Japan has now launched 8K TV in preparation for the 2020 Tokyo Olympics, the rest of the world will be slower to follow suit, given that the number of homes with 8K-ready TVs will remain low until the mid 2020s.”

“Owners of 8K TVs will primarily be watching 4K and HD content, while the TV’s image processors will do a good job of scaling most content to give impressive images,” said David Watkins, director at Strategy Analytics, in a statement. “Amidst the excitement surrounding 8K TVs, it is important to remember that image resolution, whether native or otherwise, is only one element in perceived video quality, and TV vendors and content players alike should not lose focus on other important drivers of consumer satisfaction, such as High Dynamic Range (HDR) and High Frame Rate (HFR).”

Amazon, Google Smart Speaker Market Hold Under Threat by China

Amazon introduced the first voice-activated smart speaker in 2014 with Alexa and Amazon Echo. According to new data from Strategy Analytics, Amazon’s global smart speaker share of shipments fell to 41% in the second quarter (ended June 30) from 44% in Q1 and 76% in Q2 2017.

By contrast, Google increased its share to 28% in Q2, up from 16% during the same period last year. China’s Alibaba finished third with Apple and rounding out the top five.

David Watkins, director at Strategy Analytics, says Amazon and Google accounted for a 69% share of global smart speaker shipments in Q2, which was down from more than 90% in Q2 2017.

“The drop is not only a reflection of growing competition in the smart speaker market but also Amazon and Google’s inability to break into the fast-growing Chinese market that is dominated by local powerhouse brands such as Alibaba, and Baidu,” Watkins said in a statement.

Indeed, Strategy Analytics contends China has the potential to become a lucrative market for smart speakers driven by voice-activated software – as underscored by Google’s recent $500 million strategic partnership with Chinese ecommerce giant

David Mercer, VP at Strategy Analytics, believes Google and Amazon’s pursuit of volume over margin has made it difficult for third-party entry-level speakers entering the market with similar features.

However, Mercer contends the premium end of the market offers opportunity to vendors such as Roku who can entice consumers with superior build and audio quality.

“Early adopters of low-cost smart speakers such as the Echo Dot or Google Home Mini who are now looking to buy a second device will be a key target demographic for such vendors,” he said. “Apple has established an early lead in the premium smart speaker market, benefiting from a fiercely loyal fan base and strong momentum behind its Apple Music service. However, we expect the higher end smart speaker market to grow and become much more competitive moving forwards as vendors such as Samsung with its Galaxy Home speaker look to capitalize on the growing acceptance of voice as an established control mechanism.”