TV streaming habits in lockdown
Summary
An estimated 4.6 million new SVoD subscriptions have been taken out since the start of the lockdown
Consumers say they are more willing to take out new SVoD subscriptions because they’re watching more content in general and like the flexibility of these services
Just one month after its UK launch, Disney+ has attracted an impressive 1.6 million subscribers
85 per cent of Disney+ subscribers say they are likely to continue subscribing after the current crisis is over
Consumers are impressed with the new Disney service – but Netflix still comes out on top by some margin in terms of consumer satisfaction
Introduction
The effects of the current pandemic are being felt across the economy. The TV industry is no exception – with significant business challenges alongside rapid changes in consumer behaviour which will have long-term consequences. Broadcasters are having to deal with the paradox of increased viewing – in any normal time a positive thing – while confronting a huge reduction in advertising spend and a loss of supply of new programming. ITV and Channel 4 have said that current advertising sales are down 40-50 per cent; even with a hoped for recovery in the second half of the year, AA WARC revised its forecasts for 2020 UK ad revenue, saying it expects TV ad spend alone to fall by almost 20 per cent for the full year.[1] At the same time there has been a rise in usage of SVoD and streaming services, accelerating behavioural shifts that were already under way, and potentially bringing long-term structural change to the industry. But which services are gaining most from these changing viewing habits, and might the lock down accelerate the transition in viewing towards SVoD services?
O&O commissioned its research partners, FlyResearch, to conduct a nationally representative survey of 3,399 individuals in the UK, to better understand the impact on individual services and what the TV landscape might look in the medium to long term. The survey was conducted during the last weekend of April. We set out some of our key findings below.
Consumption habits and attitudes towards paid services have changed
We found that people’s attitude towards SVoDs has changed in general: 26 per cent of people reported being more willing to consider subscribing to online video services than before the current crisis. The appetite for fresh entertainment during lockdown, when content from traditional channels has been exhausted, along with increased demand for TV content at all times of the day, and the importance of escapist TV, are contributing to consumers re-evaluating SVoD services.
Looking at the number of people who have acted on this, overall, 18 per cent of people have tried or subscribed to a new SVoD service since lockdown, with the main reason for taking up a new service being that they are watching more TV content in general. However, other factors are also clearly at play; SVoD services are increasingly turning to originations and exclusive content to differentiate their offering in a crowded market, and content quality and exclusivity is an important attraction to around a third of consumers. As well as this, the flexibility of à la carte, unbundled subscription combinations, which provide a potentially cheaper option than traditional pay TV, is something to which consumers are likely to become increasingly attuned in the medium to long term.
Figure 1 Reasons for subscribing to new online video service(s)
Existing subscribers to paid services report they are spending more time watching them, with Netflix subscribers the most likely to report an increase in viewing time (Figure 2). On the flip side, subscribers to Sky Sports and BT Sport report that they are spending less time with those services, unsurprising considering the postponement or cancellation of professional sporting events. This is also likely to have had an influence on some of the consumers who are now favouring SVoD services, because of their flexibility compared to pay TV: with no sport, some may want to opt out of their pay-TV packages altogether. Sky is enabling customers to pause their sports subscription for the duration of the outbreak, which could reduce the likelihood that people cancel their Sky subscriptions altogether.
Figure 2 Respondents reporting increase in time spent watching paid services
All in all, we estimate that 4.6 million new subscriptions to streaming services have been taken out in the UK (including free trials) since the start of the lockdown. Indeed, it has been widely reported that Netflix has experienced a surge in new subscriptions globally, since the start of the outbreak. However, the introduction of Disney+ into the US market resulted in a fall in Netflix subscriptions, and while we might have expected a similar effect in the UK and Europe, the COVID-19 impact has probably more than offset this.[2]
Disney+ has won an immediate following
It was widely reported that Disney+ racked up an impressive 28.6 million subscribers globally in the two and a half months following its launch in the US in November 2019. Between early February and early April 2020 – with a launch across selected European markets at the end of March – the service achieved total subscription numbers of 50 million.[3]
Our survey indicates that 1.6 million people have already subscribed to the new service in the UK (including those currently on the one week free trial), and 85 per cent of subscribers say they intend to continue subscribing after the current crisis is over. A further 13 per cent of people who have not yet tried Disney+ expressed an interest in trying it – testimony to the success of Disney’s marketing. Disney+ could be well past two million subscribers in the near future.
Consumers’ attitudes to different services
Although Disney+ has attracted a substantial number of new subscriptions, how do consumer experiences compare to established services like Netflix, Amazon Video and NowTV? We asked users of these major SVoD services (existing subscribers and those who have only recently tried them) their opinions on each of the services to which they subscribe.
In terms of positive attributes, such as value for money and quality of catalogue, Disney+ measures up to Amazon, but is some way behind Netflix.
Figure 3 Consumer experience of Disney+ versus existing SVoD services
Overall, Netflix is still significantly ahead of its rivals – both Disney+ and established competitors – in terms of customer ratings. According to our survey, its Net Promoter Score (whether users would promote, or recommend the service) was +37 per cent, standing apart from Disney+’s +19 per cent, Amazon’s +5 per cent, and Now TV’s -5 per cent.
The shift to on-demand has been accelerated by the current crisis – and we will come out the other side to a new TV landscape
The unprecedented situation through which we are living appears to have accelerated the long-term shift towards on-demand video consumption, and has highlighted the importance of quality, exclusive content in differentiating an SVoD service. In the short term SVoD services are increasingly seen as an alternative to costly and less flexible pay-TV subscriptions, and a great way to satisfy the appetite for entertainment during many consumers’ new-found extended leisure time.
By some margin, the highest proportion of subscribers to Netflix said they would continue to subscribe once the current crisis is over. The size and variety of catalogue may be what enables long-standing generalist SVoD services to come out on top in the long run, when the novelty of new market entrants wears off.
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FOOTNOTES
[1] AA Warc press release, 30 April 2020, https://expenditurereport.warc.com/media/1219/q42019pr.pdf
[2] Dominic Rushe and Benjamin Lee, “Netflix doubles expected tally of new subscribers amid Covid-19 lockdown”, The Guardian, 21 April 2020, https://www.theguardian.com/media/2020/apr/21/netflix-new-subscribers-covid-19-lockdown Coral Murphy, “Netflix lost over one million subscribers to Disney Plus, analysts say”, USA Today, 20 December 2019, https://eu.usatoday.com/story/money/2019/12/20/disney-plus-netflix-lost-over-1-m-subscribers-analyst-says/2708831001/
[3] Anthony Ha, “Disney+ already has 28.6m subscribers”, TechCrunch, 4 February 2020, https://techcrunch.com/2020/02/04/disney-plus-subscribers/ Justin Harper, “Disney Plus racks up 50m subscribers in five months”, BBC, 9 April 2020, https://www.bbc.co.uk/news/business-52211207