Following a sluggish start, WarnerMedia’s subscription streaming video/AVOD platform HBO Max is running on all cylinders. New estimates from eMarketer suggest the SVOD service will reach 80 million subscribers by the end of the year. That’s up from previous projection of 100 million subs by 2025.
The research firm contends that WarnerMedia’s decision to consolidate the HBO Go and HBO Now platforms into Max helped drive up subscriptions. However, with Amazon last month announcing it would drop Max from its Prime Channels platform, industry scuttlebutt suggests the streamer could lose 5 million Max subs.
“The older streaming services HBO Go and Now have been replaced by Max, and HBO has been removed from Amazon Prime Video Channels,” analyst Ross Benes wrote in a post. “These developments allow Max to absorb viewership from various HBO domains that have either been shuttered or rebranded.”
Benes believes that with Max now available on Roku and Amazon Fire TV, a better picture has emerged regarding subscriber traction. Max’s sub additions were also bolstered by Warner Bros. Pictures releasing its new movies straight to the streaming service in 2021.
“Together, the shrinking theatrical window, clearer subscriber metrics from the company, improved distribution, and consolidated operations have helped HBO Max add viewers at a faster rate than we previously expected,” Benes wrote.
The pay-TV market may be in decline — especially in the United States — but globally, the industry saw an addition of 3.1 million subscribers in the second quarter (ended June 30), according to new data from Ampere Analysis.
The London-based research firm said that despite the loss of live sports due to the coronavirus pandemic — a major draw for pay-TV — emerging markets have seen subscriber gains, spearheaded by China adding 3.1 million subs, and offset by a loss of 1.1 million subs in the rest of the world.
The data is based on a “bellwether” of the top 70 reporting pay-TV operators, which represent more than half of the world’s 1.1 billion pay-TV subscribers.
The U.S. continued to be the loss leader, with 1.4 million subs decline in the quarter across bellwether companies — despite sub upticks from Charter and Dish Network. Other loss leaders included Australia, with Foxtel being hit particularly hard by the lack of sports in Q2; and Denmark, which has been suffering ongoing pay-TV losses since Q4 2016.
“While some countries are seeing pay-TV subscriptions suffer due to the pandemic, there is still growth in the market, driven partly by bundling of services,” senior analyst Toby Holleran said in a statement. “Cord-cutters in a number of developed territories like Canada — whose pay-TV market continues to mirror its North American neighbor — are being replaced by newer TV customers in emerging markets, leaving the market as a whole stable.”
In another reminder the traditional pay-TV business model’s leak is widening, Comcast Cable Jan. 23 reported a drop of 149,000 video subscribers in the fourth quarter, ended Dec. 31, 2019. The nation’s largest cable operator lost a record 733,000 video subs in 2019 — underscoring consumers’ growing disinterest in the cable bundle and migration toward less-expensive over-the-top video distribution.
Comcast, which ended the year with 20.2 million video subscribers, is offsetting video sub losses with broadband — the lifeblood of video streaming. The company is one of the largest ISP operators, adding 424,000 high-speed Internet subs in the quarter; and 1.4 million for the fiscal year, including business customers.
Comcast ended 2019 with 28.6 million broadband subs, up 5% from 27.2 million subs at the end of 2018.
In a statement, CEO Brian Roberts lauded the company’s broadband subscriber growth, adding the Comcast in 2020 would differentiate its broadband product in the U.S. through innovations like Flex and xFi Advanced Security; accelerating the deployment of Sky Q and launching a new broadband service in Italy.
The executive said Comcast has high hopes for the April debut of Peacock, the company’s first branded over-the-top video platform featuring both subscription and ad-supported services.
Netflix Dec. 16 for the first time broke out revenue and subscriber numbers for three international regions in a filing with the Securities and Exchange Commission.
The numbers show higher revenue growth rates outside the United States and Canada over the past three years.
In those two countries, according to an 8K filing, Netflix said its subscription streaming revenue was up nearly 21% for the first nine months of 2019 compared to the comparable period last year, rising to nearly $7.4 billion from $6.12 billion.
During that same period, SVOD revenue in the Europe, Middle East and Africa region grew 39%, to $3.98 billion from $2.87 billion. Revenue was up 57% in Asia-Pacific, to $1.05 billion in the first nine months of 2019 from $668 million in the first nine months of 2018, and 27% in Latin America, to $2.05 billion from $1.67 billion.
Comparing SVOD revenue for the first nine months of 2019 with the comparable period two years ago, the United States saw gains of 51%, compared to revenue hikes of 79% in Latin America, 144% in Europe, the Middle East and Africa, and 163% in Asia Pacific.
At the end of September 2019, Netflix had 67.11 million paid subscribers in the United States and Canada; 47.36 million in Europe, the Middle East and Africa; 29.38 million in Latin America; and 14.49 million in Asia.
The company says that beginning in the fourth quarter, it will report financials for the same four regions. Netflix previously reported financials in just two categories, the United States and Canada and globally.
Netflix has steadfastly refused to insert third-party advertising in programming as Hulu does on its basic subscription plan.
New data from Hub Entertainment Research contends the SVOD behemoth could lose 23% of its subscribers if it added advertising, according to a June survey of 1,765 U.S. broadband consumers. About 41% of respondents said they would keep Netflix.
The SVOD pioneer ended its most-recent fiscal period with nearly 150 subscribers worldwide, including more than 50 million in the United States.
Hub found more receptive respondents to ads on Netflix if the service also lowered the monthly subscription plan pricing. About 33% of respondents said they would accept ads if their monthly plan decreased by $1.
The percentage of ad converts increased when the monthly fee dropped by $2 or more with 53% saying they would keep Netflix and 14% saying they would not.
“The success of any Netflix ad-supported plan — whether to replace or add to its current offering — will naturally depend on whether consumers feel they’re getting a sufficient price-break return on their ad-viewing investment,” Peter Fondulas, analyst and co-author of the study, said in a statement. “But one thing is clear from these results: after one increase already in 2019, any attempt by Netflix to use an ad-supported plan as a reason to hike its ad-free price again could seriously backfire.”
As expected, pay-TV operators lost myriad subscribers in the first quarter (ended March 31) due to ongoing consumer adoption of new home entertainment distribution options, including over-the-top video.
The top-10 pay-TV operators lost nearly a combined 1.3 million subscribers in the period, spearheaded by satellite TV, according to new data from Informitv. That loss is nearly 50% of all subscribers who cancelled service in 2018.
AT&T led all multichannel video program distributors with 544,000 subs lost through its DirecTV (satellite), U-verse and DirecTV Now brands. Dish Network lost 266,000 subs, or 1.2 million in the past 12 months.
Charter Spectrum lost 152,000 subs, while Comcast lost 107,000. Verizon Fios lost 53,000, while Frontier and Mediacom lost 54,000 and 12,000, respectively. The ongoing industry losses prompted Cox Communications to stop revealing subscriber data.
The top 10 MVPD providers now penetrate about 70% of domestic households with nearly 82 million subscribers.
“They still command a significant number of customers, but the rate of attrition has increased,” Dr. William Cooper, editor of the Informitv, said in a statement.
Netflix hit another home run in subscriber growth, adding record 9.6 million net additions in the first quarter, ended March 31 — up more than 16% from 8.26 million net additions in the previous-year period.
Netflix ended the period with 148.86 million paid subs, up 25.2% from 118.9 million subs in the previous-year period.
The subscription streaming video pioneer April 16 said it added 1.74 million domestic subs to 60.2 million, in addition to 7.86 million subs internationally to 88.6 million. The service had forecast subscriber growth of 1.6 million domestic and 7.3 million foreign.
Wedbush Securities media analyst (and Netflix bear) Michael Pachter had projected 1.5 million domestic subs; 7.3 million internationally.
Netflix posted net income of $344 million on revenue of $4.5 billion. That compared to net income of $290 million and revenue of $3.7 billion during the previous-year period.
Notably, Netflix alluded to its recent price hikes in the U.S., Brazil, Mexico and parts of Europe having some effect in the current quarter. Indeed, the streamer is projecting 5 million new subs in the current second quarter (ending June 30) — about 1 million below Wall Street projections.
“The response in the U.S. so far is as we expected and is tracking similarly to what we saw in Canada following our Q4’18 increase, where our gross additions are unaffected, and we see some modest short-term churn effect as members consent to the price change,” CEO Reed Hastings and CFO Spence Neumann wrote in the shareholder letter.
The executives hailed recent OTT video announcements by Apple and Disney as “world class consumer brands,” adding that Netflix would be “excited to compete.”
Hastings and Neumann said they don’t expect Apple TV+ and Disney+ to materially affect its growth because the ongoing transition from linear to on-demand video is “so massive” and because of the differing nature of Netflix’s content offerings.
“We believe we’ll all continue to grow as we each invest more in content and improve our service and as consumers continue to migrate away from linear viewing [similar to how U.S. cable networks collectively grew for years as viewing shifted from broadcast networks during the 1980s and 1990s],” Hastings and Neumann wrote.
Netflix’s legacy by-mail disc rental service continues to generate significant operating income. The oft-neglected (by management) business contributed $46.7 million in operating income on revenue of $80.6 million. That compared to operating income of $56.8 million and revenue of $98.7 million last year.
The service ended the period with more than 2.5 million disc subscribers, down from 3.1 million subs last year.
Netflix said new-release movie, Triple Frontier, starring Ben Affleck, has been watched by more than 52 million member households in its first four weeks on Netflix.
The streamer said new-release movie, The Highwaymen, starring Kevin Costner and Woody Harrelson as two lawmen attempting to bring Bonnie and Clyde to justice, is on track to being watched by more than 40 million subscriber households in its first month.
Separately, Netflix said original documentary, FYRE: The Greatest Party That Never Happened, has been watched by more than 20 million member households in its first month on Netflix.
Doc Our Planet, filmed over four years in 50 countries, is tracking to be one of Netflix’s most successful global documentary series, with more than 25 million subscriber households projected to watch in the first month of release.
Netflix is raising the price for its domestic subscription plans.
The SVOD pioneer’s basic $7.99 single-viewer, non-HD plan is increasing to $8.99 monthly, while the standard $10.99 two HD streams plan is jumping to $12.99. The premium four-stream HD plan increases to $15.99 from $13.99.
The new pricing, which affects about 40 countries, impacts new subscribers immediately, while existing subs will be transitioned over the next 90 days.
“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience,” Netflix said in a statement.
The service, which hasn’t raised prices since late 2017, hinted at a possible hike during the last fiscal webcast when chief product officer Greg Peters told analysts the service was justified “to increase price a bit.”
Netflix ended the most-recent fiscal period with more than 130 million paid subscribers.