Commentary

SVOD Penetration Grows

by Daisy Whitney , Op-Ed Contributor, May 19, 2016

Consumers are voting with their wallets in favor of subscription video services. Driven by the strength and near-ubiquity of Neflix, subscription VOD services have become more popular than ad-supported online streaming from sites like Hulu, according to a Hub Research study. The report found that in 2015, about 47% of U.S. consumers subscribed to an online streaming service, and that number jumped a whopping 21 points to 68% this year.

Netflix carries the load, but Amazon and Hulu’s subscription video services are growing too, by 59% and 60% over last year, Hub said. More consumers are using multiple SVOD services too. About 37% have two or more SVOD services, up from 19% who had more than one a year ago, the research found.

This trend potentially moves OTT services to a more competitive footing with multichannel TV services from cablers and the like.

Netflix is poised to keep growing and reaping the benefits of consumer viewing habits. Two-thirds of TV consumers say it delivers a good or excellent value. Interestingly, that’s a higher rating than the free version of Hulu, which received favorable reviews from 61%.

But never fear: Ad-supported content isn’t going away.

YouTube is still a dominant player. In fact, Bernstein Research predicted that YouTube will in time become bigger than most “ legacy media companies” and shift even more dollars to the Internet. The site is doing that with a small portion of content. The top 1% of YouTube channels comprise 93% of all its views since YouTube began, the firm said. That’s why the video giant is betting on its top creators to draw eyeballs and brands that want to reach those consumers.

Stock analysis firm Amigo Bulls has predicted that YouTube will grow at 21% for the next four years, earnings $27.4 billion in revenues then, according to a TubeFilter report.

Those numbers are quite high, so only time will tell.

Meanwhile, YouTube has said that the number of hours spent watching YouTube on TVs doubled in the fourth quarter, and among teens, eight of the top 10 most influential celebs are YouTube stars. Also, six in 10 YouTube subscribers say their opinion on a brand has been influenced by a YouTube video star.

cable tv, hulu, netflix, svod, video, youtube

4 comments about "SVOD Penetration Grows".

Check to receive email when comments are posted.

Leonard Zachary from T___n__, May 19, 2016 at 2:41 p.m.
ED say it isn't so
Reply

Ed Papazian from Media Dynamics Inc, May 19, 2016 at 4:15 p.m.

According to Nielsen, about 63% of U.S. TV homes have access to one or more SVOD platforms however many of these are Amazon Prime subs who don't use this facility for streaming video.About 50% of the country is probably the true active user base.

SVOD penetration will probably rise to about 70% shortly but, again, this does not translate directly into viewing frequency. More to the point, except for limited options, advertisers can't "follow the audience" to SVOD as most SVOD services don't sell ads. At present approximately 85% of combined TV/SVOD viewing is to ad-supported channels. If we add other online ad vehicles, the digital total rises, somewhat, however, most advertisers of the TV branding type desire suitable content to sponsor, and this is of limited supply in digital.

Net, net: "linear TV" will continue to provide the vast majority of branding ad "impressions"---even among younger audiences---for the foreseeable future. This does not mean that advertisers should ignore digital options. By all means use those that offer value but not as a substitute for TV---rather, use digital as a specialized targeting supplement to TV.

Leonard Zachary from T___n__, May 23, 2016 at 1:37 p.m.

Flat to decreasing PayTv subs and skinny bundles seem to contradict Ed's analysis...

Ed Papazian from Media Dynamics Inc, May 23, 2016 at 8:14 p.m.

2+2=4 is buggy whip. The true answer is 69.87.