Consumers have limited interest in paying for numerous online subscription-video services, and expect unique content to keep them coming and coming back, a new study suggests. It’s further evidence that the coming wars for SVOD viewers will be expensive, both for content creation and marketing/retention.
The just-released study of 2,007 U.S. adult online users was administered by Vorhaus Advisors, headed by former Magid Associates President Mike Vorhaus, and the digital group at law firm Manatt, Phelps & Phillips. Vorhaus presented the study’s findings onstage at VidCon, the giant influencer conference that opened Thursday in Anaheim.
The study found that half of U.S. adults, including two-thirds of those 18 to 34 years old, already watch online video daily, a number that will only escalate, Vorhaus said.
This year, some 11 percent of those surveyed (and 14 percent of 18-34s) said they are “extremely likely” to cut the cord soon, and another 10 percent (14 percent of the younger group) say they’re “somewhat likely” to do so.
“I’ve never seen a number that high, and even if it’s half that number, it’s huge for these MSOs,” Vorhaus said. “This is happening; the traditional model is breaking down. It’s breaking down even further in the key demo of 18-34.”
Traditional TV remains the most popular way to consume entertainment, but only 43 percent of those surveyed say so.
“While television remains the leading platform for video viewership among all consumers, the smartphone is dominant among those 18-34, which bodes well for mobile-first content strategies,” said Manatt partner Ned Sherman, leader of its digital and technology transactions group.
Among younger users, almost half (a combined 49 percent) use a smartphone or computer for their online video experiences. Only 19 percent of those users prefer using a TV for entertainment.
“There’s still a lot of people using (TV),” Vorhaus said. “The average amount of time spent (watching TV) hasn’t gone down. But mobile is going to dominate the future.”
As people replace their traditional pay-TV providers with Internet-enabled sources, they will expect unique content to help them decide what services they’ll subscribe to, the study says. It’s the single biggest factor cited by those surveyed.
And as they cut the cord, users said they have limited interest in paying for numerous services. The average user already subscribes to about two pay services, and is interested in buying only 1.6 more, according to the study.
Depending on how you tote up the contenders (does Quibi count, given that it’s mobile only, and won’t launch until at least April?), the study’s numbers suggest only about half the major players might be able to draw subscribers. And never mind the hundreds of niche services, such as Crunchyroll or WoW Presents Plus.
“Our research made clear that unique content will continue to be a driver for user acquisition on SVOD services, which is expected to fuel investment in content as the streaming wars heat up,” Sherman said.
With easy cancellations and lots of tempting shows on competing services, churn will be a major headache for service operators. It’ll place a premium on compelling content, intuitive interfaces, and marketing to attract and keep customers.
Sherman and Vorhaus said the study also found fast-rising interest in watching esports. Nearly 50 percent of younger survey participants said they were watching more esports now than they were six months ago. And almost as many said they expect to be watching even more esports six months from now.
While those viewers may still be doing other things, like sending a text message, during an esports match, Vorhaus said, they definitely aren’t also watching a traditional studio’s two-hour feature film. This shift in attention and core watch time has big implications throughout entertainment.
“In addition to the surge in online video viewership more generally, the market for esports is massive and an area that our team is deeply involved in as companies assess investment and M&A opportunities,” Sherman said. “We’ve represented some of the major players as well as negotiated team and player agreements for the top esports competitors in the industry, and this research reinforces that the market for this will only continue to grow.”