SVOD HH penetration on the rise, but account sharing costly to providers

By Jim O'Neill on May 18 2015 at 5:45 AM
SVOD HH penetration on the rise, but account sharing costly to providers

The number of SVOD households in the U.S. continues to climb, with 57% of all broadband connected HH, but sharing services also has increased, cutting into potential revenues for the service provider.

And, according to research from Parks Associates, the amount of SVOD video being consumed by subscribers compared to what they're paying for it is a bargain.

“Over one-third of video consumed per week is OTT, but it is only 9% of the household video budget,” said Brett Sappington, director of research, Parks Associates.

Video spend is being negatively impacted by consumers’ ability to share their passwords and accounts.

 “Account sharing is part of the larger problem in monetizing the strong consumer demand for OTT content,” he said.

About 11% of Netflix subscribers, 10% of Hulu Plus subscribers, and 5% of Amazon Prime Instant Video subscribers use an account paid for by someone else, the researcher said.

Not surprisingly, account sharing is highest among younger households, where 22% of those 18-24 who use an OTT service use a subscription paid by someone outside of their household.

This OTT account-sharing research includes OTT services that are independent of pay-TV services.

“In terms of hours of consumption per dollar spent, consumers have every reason to shift spending to online video,” Sappington said. “While the all-you-can-eat subscription model is very popular, several OTT services are experimenting with models that blend advertising, subscription, and transactional options.

“Pay-TV providers will have to quickly move up the OTT learning curve, which is very different from the traditional pay-TV environment.”

Parks account sharing numbers are considerably lower than those reported by Consumer Reports, which in January said a survey it conducted showed 46% of subscribers say they share their account password with someone outside their home.

Some providers say they’re not concerned with account sharing, with HBO Chief Richard Plepler, for instance, saying that he believes the problem is overblown.

Other services, like Netflix, allows up to four simultaneous streams, depending on subscription level.

Hulu allows only a single stream, Amazon Prime allows up to two streams in a single household and HBO Go allows three streams in a single household.

Stay tuned.

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