New research from Parks Associates’ OTT Video Market Tracker shows that through Q3 2020, the number of OTT video services in the U.S. has more than doubled since 2014. The market now includes nearly 300 different services. The rate of closure has also declined. It reached a peak in 2018 when 19 services left the market. However, only six have ceased operations in 2020 so far.
Notably, Parks’ latest report examines the impact of Covid-19 on the longstanding practice of theatrical windowing. Many studios have put off premieres until 2021. However, Disney opted to debut two films on VOD, except in markets where its Disney+ service had not yet launched.
Impact on theaters and OTT competitors
As the report points out, Disney+’s Premier Access program initially bypasses all of the major services in the OTT space. It provides a single direct access point to viewing a piece of premium and exclusive content. As such, it not only directly competes with theaters but leading OTT services as well. It looks like Disney’s Premier Access concept is impacting the transactional VOD system and customers alike.
Disney’s strategy with Premier Access is two-pronged:
Drive incremental revenue among existing Disney+ subscribers. They are much more likely than non-subscribers to pay a premium on top of their monthly subscription fee to get exclusive access to a Disney-produced first-run movie;
Drive incremental Disney+ subscriptions among households with younger children who are interested in seeing a blockbuster title from Disney but do not yet subscribe to the service.
Long-term industry impact
Other subscription-based OTT services that produce and distribute original movies, such as Netflix and Amazon, have circumvented the traditional content windowing process with movie theaters, physical media, and other VOD platforms for years. Whichever path Disney takes for its upcoming blockbuster titles, the precedent has been set with the development of its Premier Access program.
The full financial picture has not yet emerged, despite the early success of Disney+. It will be interesting to see whether other studios follow suit and test major OTT premieres. And, of course, the entire industry is watching to see whether this was a short-term strategy to address the impact of Covid-19 or becomes a transformative trend in the film and video industry in the long term.
In the amount
of time it takes the average TV viewer to contemplate subscribing to a new
streaming service, five new streaming services have appeared.
That last part’s not actually true. But given the way streaming services keep popping up, it’s likely closer to accurate than either we or our wallets would like to believe. That said, there’s only one such service looming on the immediate horizon that’s capturing the attention of viewers in virtually every age demographic. Slated to make its grand debut on November 12, everyone is watching out for Disney+.
The origins of Disney+ date back to August 2016, when The Walt Disney Company acquired a minority stake in BAMTech, a spin-off of MLB Advanced Media, the digital media arm of Major League Baseball. A year later, they upgraded to a controlling stake in BAMTech and on April 18, 2018, Disney subsidiary ESPN kicked off their streaming service (ESPN+).
By that point, however, Disney had long since seen the potential in constructing their streaming offering. They began setting things in motion, having already swiped back the rights to the Marvel and Star Wars movies from Netflix and set a deal to acquire 21st Century Fox’s entertainment assets.
If you’re wondering what this means in terms of content available on the Disney+ service, just sit back and spend the next three hours and eighteen minutes (give or take a few seconds) watching this trailer. As its title helpfully explains, it offers a glimpse of “Basically Everything Coming to Disney+ on November 12.”
No, we don’t
think that you actually watched all three plus hours. However, we suspect you
couldn’t resist skipping around enough to see how much Disney, Marvel, National
Geographic, Pixar, Star Wars, and other programming Disney+ is bringing
to the table – and to your screen – when it bows next week.
Unsurprisingly, The Walt Disney Company is making it very easy to secure subscriptions to Disney+ as they prepare for rollout. They’re also providing ample incentives to give it a try, whether it’s the 7-day free trial membership, the streaming bundle of Disney+, ESPN+ and the ad-supported version of Hulu for $12.99 a month. There’s also the deal where Verizon is offering 12 free months of Disney+ to all new and existing 4G LTE and 5G unlimited wireless customers as well as to existing Fios Home Internet and 5G Home customers.
Yet the question remains: Given all
the other streaming services out there, will viewers really be champing at the
bit to add Disney+ to their “collection” come November 12?
Here are five reasons why Disney+ looks
like a must-watch:
1. Disney+ is the new “Disney
In the past, whenever Disney has decided to reissue various films, they’ve done so in an ostensibly limited-edition fashion. They assure consumers that, at a certain point, they’ll stop production and the film will go “back into the Disney Vault” until such time as they decide to reissue it again. Disney+ is already being viewed as a virtual vault. However, viewers can access their favs whenever they want…for a nominal monthly fee, of course.
2. If you like Star Wars and Marvel movies, it’s now the only place you can stream them.
As we mentioned above, it wasn’t a good day for Netflix when they found out that they were going to be losing not only the Disney movies they’d had in their catalog but, indeed, the Star Wars and Marvel stuff, too. One need only look at the top box office blockbusters of the past decade to see how valuable those franchises are. And that’s not even contemplating the drawing power of the new original Star Wars and Marvel series that Disney+ is adding to their programming roster.
3. Those 21st
Century Fox entertainment properties? Yeah, that includes The Simpsons.
Yes, yes, Avatar is in the mix, too. And that’ll be a big deal as we get closer to the release of Avatar 2. But Simpsons fans are a devoted bunch. Remember that FXX’s earlier deal with the series resulted in some record-setting programming and a great deal of viewership. However, giving those fans the opportunity to secure access to more than 650 episodes of the series – and the movie, too! – in an ad-free environment is enough to make them shout, “Gimme, gimme, gimme!” and subscribe post-haste.
4. The “come for the
classics, stick around to see what’s next” rollout plan.
Disney+ certainly isn’t shirking on
offering interesting and high-profile new programming straight out of the gate.
This includes a Toy Story spin-off series (Forky Asks a
Question), a new Star Wars series (The
Mandalorian), and an extension of the High School Musical
franchise with a tongue-twisting title (High School
Musical: The Musical: The Series). However, Disney+ also has some deals
on the horizon that strengthen the appeal of its debut. They’re understandably
confident that no one will walk away from the service when they know they’re
going to be getting a Monsters Inc. sequel series (Monsters at Work),
a second Star Wars series that has Ewan Macgregor reprising his role as
Obi-Wan Kenobi, and no less than eight new Marvel series.
5. Even setting
aside the aforementioned sign-up deals, the standard monthly price is still a
Of course, the
definition of “a steal” is relative. That said, consider this: Disney+ is $6.99
a month, whereas Amazon Prime is $8.99 a month, Netflix is anywhere from $8.99-$15.99
depending on which plan you have, Hulu is $11.99 a month, and HBO Now is $14.99.
No matter how you slice it, Disney+ is a bargain.
say that November 12, 2019 will be remembered as the day the sun set on Netflix
and rose with Disney+ as the new king of streaming. But it’s evident that there’s
a tussle on the horizon that’s going to put the battle between Simba and Scar
to shame. And, hey, the good news is that ringside seats only cost $6.99 a month!
About the author
Will Harris has a
longstanding history of doing long-form interviews with random pop culture
figures for the A.V. Club, Vulture, and a variety of other outlets, including
Variety. He’s currently working on a book with David Zucker, Jim Abrahams, and
Jerry Zucker. (And don’t call him Shirley.)
It used to be a given that advertising was the major driving force in media business models—from TV ads to sponsored content online. But two big factors have scrambled that equation: 1) data and brand safety scandals at Facebook and YouTube as the EU pushes stronger data rules; and 2) the rise of streaming content as cable-cutters and cable-nevers soar.
More and more, consumers are paying for premium content without advertising. This includes streaming services such as Spotify, Netflix and HBO. Even Facebook researching a new subscription-based, ad-free version as privacy concerns mount. As the upfronts take place this week, a new reality is setting in for TV networks as Magna projects a 2% decline in national TV ad sales each year through 2022.
For publishers, this means giving much more serious consideration of ways to offer consumers a user-friendly, ad-free environment. It’s also time for serious reckoning of what content will succeed with a subscription.
Incumbency and Monthly Rates
Make no mistake about it: The popularity of non-cable, commercial-free shows, and their seemingly indispensable association from today’s cultural conversation, means that TV — if we are still choosing to call this TV — no longer rots your brain. Rather, HBO, Netflix, Hulu, Amazon, and other such services are, arguably, as good for you as the best journalistic enterprise. And that means that for many people, a monthly fee is worth it. The result is a profitable business enterprise.
But these networks have their own strategies and identities behind those business models. HBO has long been established as a premium cable network, and that incumbency has given the network a leg up. Subscribers who pay for HBO are probably likely to leave it on in the background after they finish watching their favorite show because they know they’re paying for high-quality content. Netflix also has a comparable consumer base. However, the typical Netflix consumer’s watch-and-go mentality means the network has to keep churning out new content.
Still, the high growth rate for both networks means their consumer base hasn’t even peaked yet. As cable continues to decline, both HBO and Netflix will have to remain nimble. But a loyal fan base willing to continue to pay will certainly help sow the seeds for more good shows to sprout.
AMC Networks Offers Multiple Options
In comparison, with fewer younger audiences and diminishing returns on network advertising, more traditional broadcast and cable networks must balance out their options. Take AMC Networks: Two-thirds of its revenue comes from distribution fees and sales of content to streaming and pay services, while one-third of that revenue pie comes from advertising. While its first quarter earnings set records, ad revenues were down 9%, distribution revenue increased 11%, including to networks like YouTube TV and Acorn TV.
AMC Networks CEO Josh Sapan anticipates this revenue pie will continue to adjust as trends change. “We will probably see that accelerate toward the non-ad-supported pieces over time,” he told Deadline’s Dade Hayes.
Indeed, the network has already invested in non-ad-supported options like a premium subscription service. So, the same time AMC is continuing to make itself a quality destination for advertisers, it’s also planning for a future where advertising will play a diminished role. And its recent boffo first-quarter financial results suggest it may be on the right track.
Europe’s Privacy Laws Shift U.S. Ads
It’s not just that publishers are working against changing consumer preferences. The EU’s General Data Protection Regulation (GDPR), set to be enforced starting on May 25, will also shift the scales on data gathering and consent. Companies will have to be much more transparent about the data that they are collecting about users. Consumers in the European Union will also be able to access what data is stored about them and have the right to correct that data — regardless if that data is processed in or outside of the EU.
In March, Drawbridge, an ad-tech company that tracks users across devices, said it would wind down its advertising business in the EU because it’s unclear how the digital ad industry would ensure consumer consent. Acxiom, a data broker that provides information on more than 700 million people culled from voter records, purchasing behavior, vehicle registration, and other sources, is revising its online portals in the U.S. and Europe where consumers can see what information Acxiom has about them.
How Many Publishers Can Charge?
While ad-free environments are gaining steam, and more publishers are selling subscriptions in exchange for premium ad-free services to those with ad blockers, there are still only so many subscriptions that consumers can buy before getting overloaded. Om Malik argues that publishers will have to stop drinking their own Kool-Aid and eventually reckon with the fact that few among them will be able to fully capitalize on the subscription craze.
More likely, as ad-free environments proliferate, publishers will have to consider them as part of the mix, especially with the loss of advertising to the duopoly and data security. While not every publisher can simply put up a paywall and watch the money roll in, every publisher can consider just what they can charge for, and what their audience really values.
Consumer appetite for content is going strong: Viewers watch 4 hours and 23 minutes on average per day. However, traditional TV viewing is declining while viewing of subscription video on demand (SVOD) services is growing. In fact, subscribing to a SVOD service is becoming the norm. Two-thirds of viewers now subscribe to at least one of the three big SVOD services (Netflix, Amazon, or Hulu). In fact, according to the Hub Entertainment Research Study, Decoding the Default, 38% of viewers subscribe to two or more of the “Big 3.”
Among SVOD subscribers, three-quarters report that Netflix was their first SVOD subscription. Currently 61% of viewers subscribe to Netflix, 36% to Amazon Prime, and 22% to Hulu.
Consumers have multiple reasons for having more than one SVOD service:
Top explanations for adding Hulu to Netflix: to watch specific shows not available on Netflix (54%) and for greater selection of shows and movies generally (45%)
Top explanations for adding Amazon to Netflix: for greater selection (33%), for Amazon originals (33%), and for access to movies not on Netflix (31%).
Access to exclusive content is recognized as the key driver of SVOD subscriptions. Hub Entertainment Research identifies key consumer benefits for each platform.
Live TV: Breaking News (71%), Local TV (71%) and Local Sport Events (69%).
Netflix: Binge Viewing, Past Season Viewing (39%) Viewing (34%) and Watch on the Go (24%)
DVR: Catch-up Viewing (27%), Specific Show (16%) and Full Attention (16%)
Netflix appears to be the stickiest among those who default to Netflix. Just under two-thirds (63%) report they would drop other TV services before dropping Netflix.
To address the SVOD adoption trend, broadcast and cable networks increasingly offer multiple episodes or complete seasons via video on demand (VOD) to encourage binge watching of new series. However, these efforts have found limited success.
SVOD offers both a social and an individual experience. This is important to attract younger audiences. The growth of OTT services is changing the television industry. It will be interesting to see how the market evolves. Key questions include what new strategies will emerge and how will viewership be monetized beyond subscription revenues Will it be advertising, advertising free, or advertising light?
Subscription VOD (SVOD) penetration now equals DVR penetration in the United States. In fact, half of all viewers now have a subscription based service such as Netflix, Hulu Plus and Amazon Prime, according to Nielsen’s 1Q16 Total Audience Report. Interestingly, close to 30% of households have both an SVOD service and a DVR. Nielsen also noted that DVR penetration has flattened while SVOD is on a strong growth path. So while consumers are still obtaining most of their content on television, live TV consumption is declining as smartphone and tablet viewing is increasing.
The older the consumer, the more time spent watching television. Among adults 18-34, 39% of media consumption occurs on digital (e.g. smartphones, tablets and desktops), 15% on connected TVs (e.g. Apple TV, Roku, Google Chrome) versus 29% on live-TV and 17% on radio. In contrast, Adults 50+ spend 53% of their time on live-TV, 21% on digital, 17% on radio and 8% on connected-TVs. It’s no wonder traditional TV networks are clamoring to remain relevant and shifting to digital options such as HBO to go, CBS’ All Access and MTV’s Snapchat Channel.
Nielsen also found that the heaviest users drove a disproportionate amount of overall time spent consuming media. Just over half of the total minutes viewed (52%) on TV came from the top quintile of TV users. In addition, 83% of smartphone video viewing, 87% of home PC streaming and 71% of connected device usage came from the top 20% of users.
Consumer behavior is responding to the growth of technologies and services and therefore reducing consumer usage on older devices. Shifts and usage of new technologies are anticipated. More media choices lead to more competition. Content providers must think about multi-platform strategies and distribution in an exceedingly connected media environment.
The media environment still presents numerous growth opportunities despite the competitive marketplace and the struggle for consumer attention. Importantly, PwC’s Annual Global Entertainment and Media Outlook Report projects the U.S. media and entertainment revenue will increase and account for $632 billion, or 29.4% of the worldwide total of over $2.1 trillion. Further, the entertainment and media revenues are expected to grow at a compound rate (CAGR) of 4.4% from $1.7 trillion in 2015 to $2.1 trillion in 2020. In order to provide this forecast for 2016 to 2020, PwC analyzed historical and projection data for advertising and consumer spending in 13 major industry segments across 54 countries.
Internet advertising in the U.S. continues as the largest market in internet advertising revenue, projected to grow from $59.6 billion in 2015 to $93.5 billion by 2020 with a 9.4% CAGR. Important to note, internet advertising ($75.3 billion) is expected to surpass broadcast TV advertising ($70.4 billion) in 2017.
Mobile has been a key driver of digital advertising revenue comprising 34.7% or $20.7 billion in 2015 of U.S. total internet revenue. PwC projects mobile video advertising revenue will grow from $3.5 billion in 2015 to $13.3 billion in 2020 for an increase of 30.3% CAGR.
Video on Demand (VOD) and over-the-top services (OTT) will drive TV and video revenue from $121.4 billion to $124.2 billion in 2020 (0.5% CAGR). In addition, TV advertising revenue is expected to rise from $69.9 billion to $81.7 billion in 2020 (3.2%CAGR).
Continued declines are anticipated for newspaper publishing, declines of 2.9% CAGR by 2020. Further publisher consolidations are expected. As well, magazine publishing revenue is not expected to decline but register a fractional increase, from $30.5 billion in 2015 to $30.7 billion in 2020. In addition, radio is predicted to increase from $21.4 billion to $23.1 billion in 2020 (1.6% CAGR).
Virtual reality devices and games will be the impetus for rising video games revenue from $17.0 billion to $20.3 billion by 2020 (3.6% CAGR). Virtual reality devices and games will be the impetus for rising video games revenue from $17.0 billion to $20.3 billion by 2020 (3.6% CAGR).
Overall, PwC projects that consumers will look for less expensive content bundles, streaming offers and less commercial interruptions. As a result, consumers’ share of time for ad-supported media will not increase. For advertisers and content providers, this means a detailed examination of the consumer experience to identify drivers of engagement and understand their impact on time spent and their influence on advertising effectiveness.
Doesn’t it seem like this year’s Upfront presentations were filled with way too many acronyms, making it harder and harder to make sense of them? Playing House’s Executive Producers, writers and stars Lennon Parham and Jessica St. Clair break down what they all mean and how they illustrate the innovation taking place at NBCUniversal.