Video Streaming Subscriptions: How big will the bubble grow?
Video On Demand Subscriptions
How big can the bubble grow?
Getting to grips with the fast changing video landscape
The dynamic world of paid online streaming services is set to get more dynamic still in the coming months. Both Disney, via Disney+, and the consortium of the BBC and ITV through their Britbox offering, are very busy behind the scenes preparing to enter the market alongside video content giants like Netflix and Amazon Prime.
Subscriber figures for the likes of Netflix have seen very impressive growth in recent years, demonstrating a strong appetite for paid online streaming. Meanwhile, both Disney and BBC/ITV undoubtedly have access to plenty of great content.
Looked at like that you could be forgiven for believing that it’s a commercial success waiting to happen. However, the question on industry lips is: Will consumers take on more paid streaming services? The answer to this question will of course become clear in the months following the Disney and Britbox launches.
But we can gain a good understanding of how consumers around the world are interacting with paid video services at present. In this report we draw upon insights from our TGI Global Quick View study which examines in-depth consumer behaviour in a harmonised questionnaire across 22 countries worldwide.
Who are the video streamers?
Adoption fluctuations by market
Exploring VOD adoption around the world
31% of connected consumers aged 16+ (those who access the internet for leisure purposes at least once a week) across the 22 countries* say they have an online video streaming service that they themselves pay for. A further 9% claim to have an online streaming service that is paid for by someone else.
One basic characteristic that marks out online video streamers from others is their likelihood to be at the younger end of the age scale. They are 24% more likely than the average connected adult to be aged 25-34 and 38% less likely to be aged 55-65.
Nearly a third of us are online paid video streaming subscribers
The countries with connected consumers most likely to claim to pay for online streaming services are topped by China (50% more likely), Denmark (39% more likely), Sweden (36% more likely) and the US (34% more likely). At the other end of the scale, amongst the 22 markets, consumers in South Africa are 86% less likely than the average, Russia 71% less likely and India 62% less likely.
It may seem that the most tech advanced markets are those that have embraced online video streaming with the greatest enthusiasm, but it’s not as simple as that and clearly there are other driving factors. Consumers in Japan are 66% less likely to pay for video streaming and in France 37% less likely.
Netflix is usually top dog but second place is far more varied
In 15 of the 22 markets Netflix is the most commonly held paid video streaming provider, as claimed by consumers.
The second most popular provider is however far less consistent, with Amazon and Google Play holding six and five second-placed spots respectively. However, second place is just as likely to be held by a more local provider, such as Ipla in Poland and Via Play in Sweden.
*List of countries included in TGI Global Quick View: Argentina, Australia, Brazil, Canada, China, Denmark, France, Great Britain, Germany, India, Italy, Japan, Mexico, Norway, Poland, Russia, South Africa, South Korea, Spain, Sweden, Turkey, USA.
Video streaming drivers
Depth of adoption and motivating factors
A market dominated by a handful of major players
In all but three of the 22 countries the top online streaming service provider has a penetration of at least a quarter of connected consumers. Conversely, only three markets have a penetration of a quarter or more for the second placed provider, indicating the dominance at the top of the market amongst the biggest players.
This could be interpreted in a couple of ways. One being that for many consumers one paid video subscription is enough. Another is that second place and establishing a solid base from which to challenge Netflix is up for grabs.
44% have at least two streaming subs, but only 18% have three or more
Beyond two paid video subscriptions, the numbers tumble dramatically. 44% of connected consumers who pay for an online streaming service have at least two paid video streaming subscriptions.
However, this falls to 18% for a minimum of three such subscriptions and to 7% for four or more. This would suggest a challenging environment for a new video streaming provider expecting to be picked up as an extra subscription.
Of course adoption of multiple video subscriptions can vary a great deal by market. In four countries (Poland, Denmark, USA, Norway) over half of those who pay for an online streaming service have at least two paid subscriptions.
Conversely, in three markets (Australia, Canada and France), fewer than a quarter of these consumers have at least two paid subscriptions.
The figures for Great Britain reveal that 31% of those who pay for video streaming have at least two such services, but this drops off sharply to 3% for a minimum of three services.
A third of streaming subscribers are very light viewers
Those watching a lot of paid video content may be the most likely to subscribe long term, but a third of subscribers claim to watch just 5 hours or less of it per week - less than an hour per day.
These subscribers might be considered more at risk of cancelling their streaming subscription or at least most unlikely to take on another. However, much will depend on context - if a new provider is considered to offer something very different that fits with the interests of a large proportion of consumers then they may make more time to view the content.
Content quality, not ads, is main driver
What is driving video streaming adoption for the consumer?
Findings from our 2019 DIMENSION study into key challenges faced by the media industry provide insight into what is driving consumer take up of TV and video subscriptions.
This study reveals that across five of the biggest ad markets in the world (UK, USA, France, China and Brazil), of those who have a video subscription service, 48% cite the main reason for doing so as the subscription offering TV, shows and films that they cannot get elsewhere.
On the other hand, 37% indicate being able to watch shows without ads as the main reason.
Thus, whilst avoidance of ads is clearly a prominent factor in taking up a video subscription, it is not as important overall as content quality.
The story is a similar one for audio subscription services, whereby for 47% of subscribers it is the service tailored to their needs that is the key consideration, with ad avoidance top choice for 36%.
Given the importance of quality content in uptake of video subscription services, it begs the question if consumers adopt more and more paid video subscriptions and spend more time watching such content, what consequences does this have for advertisers?
Ad avoidance is not that big a factor. What's changed is the abundance of premium content in subscription services. And consumers want that choice.
Kirk Olson, SVP, Managing Director, Entertainment & TrendSights, Horizon Media, USA
The measurement conundrum
If the biggest consideration is choice rather than avoidance of advertising, it becomes all the more important to measure and understand these subscribers in order to engage them effectively.
However, measurement is often many blocked as a result of a 'walled garden' approach to first party data by subscription services in an effort to better protect and monetise their business.
This measurement technology exists, it is in effect a series of political and economical considerations that infringe on the open measurement and reporting that would give the media industry as a whole a clearer, more holistic idea of viewing.
At Kantar we have experience in overcoming these challenges and delivering value to the industry by reporting on cross-media viewing of linear and video on demand services across screens.
Spotlight on Great Britain
Britain's online video streamers
Understanding the British video streamer
We can gain further insights into how consumers in Great Britain engage with paid video streaming services through Kantar's in-depth Great Britain TGI Consumer Data.
This shows that 22% of adults (aged 15+) claim to have used either Netflix, Amazon Prime Video or the Now TV app ‘in the past 7 days’, with Netflix the main driver.
TGI Consumer Data reveals these streaming video users are 74% more likely than the average adult to be aged 15-24. They are also 22% more likely to be in the top (A or B) socio-economic grades and 64% more likely to have a family income of £75,000 or more.
Altered viewing habits but receptive to messaging through TV
Adults who have accessed at least one of these streaming services ‘in the last 7 days’ are especially likely to say that their viewing habits have changed with the advent of online streaming services.
They are 90% more likely than the average adult to agree ‘Online streaming services have changed the way I watch television’ and 70% more likely to agree ‘Because of online TV streaming I now watch more television than I used to’.
They are also 28% more likely to agree ‘Whilst watching TV I search on the internet for products I see advertised’ and 29% more likely to agree ‘TV tends to influence my opinions’.
Early adopters of tech - especially keen if it can make their lives easier
This is a group that likes to keep on top of technology generally, especially for the purpose of making their lives easier. They are 51% more likely to agree ‘Apps make my daily routine easier’, 47% more likely to agree ‘I love to buy new gadgets and appliances’ and 43% more likely to agree ‘It is important my household is equipped with the latest technology’.
They are also very into gaming and are 27% more likely to be Console Kings (play mostly blockbuster games on home games consoles and likely to have a variety of interests outside gaming), but 47% less likely to be Low-Tech Puzzlers (casual gamers, not tech savvy, puzzle games especially popular).
Ambitious, but also worriers
This is a target group who have plenty of ambition compared to the average adult – an aspiration that could prove effective to appeal to – but also plenty of underlying anxiety.
They are 50% more likely to say they want to get to the very top in their career, 33% more likely to say they find it difficult to balance work, children and social life and 29% more likely to believe it is important that their family thinks they are doing well.
They are also 26% more likely to agree that they worry a lot about themselves.
Surviving and thriving in a fast changing marketplace
We have seen that those who pay for online streaming content around the world are today a group of considerable size, accounting for nearly a third of internet-using adults. They are however a fluid and fluctuating target, with considerable penetration in certain markets and very little in others.
Usage of paid video content varies a great deal between countries, raising possible question marks around the reliability of long term subscriptions from those who watch little of this content, particularly when there is a great deal of free video content available.
Whilst Netflix is often the top provider in online streaming, the second place slot in many markets is seemingly far more up for grabs, with the provider fluctuating a great deal between markets and penetration often low compared to the top player, presenting both an opportunity and a challenge for marketers in this space.
We have also seen the attitudinal biases that could be leveraged in order to efficiently engage those who pay for online video streaming services.
Whilst it is impossible to know exactly how the market will react as new paid video content providers enter, being able to leverage both global harmonised consumer behaviour insights combined with broad and deep consumer datasets at the national level, can inform on the best macro and micro approach for established content providers and newcomers alike to this dynamic, popular and keenly contested marketplace.