Wrapping up 2016 on a high note for streaming industry, consumers

By Jim O'Neill on Dec 19 2016 at 7:15 AM
Wrapping up 2016 on a high note for streaming industry, consumers

A recent study from a consumer research firm found an astonishing 41% of U.S. adults said they’d be shaving — or cutting — the pay-TV cord in the next 12 months. They also found satisfaction with OTT was higher than with pay TV and that they were more likely to recommend an OTT service to a friend or family member than a pay-TV service.

And, of course, Millennials were the highest adopters of OTT, with 84% saying they regularly use streaming services. Older users said they, too, streamed, with nearly three quarters of Gen X (74%) and well more than half (60%) of Baby Boomers watching online.

But we all knew that, right? After all, even though some pundits predicted that Netflix would struggle when it raised its prices across the board last year, losing some subscribers and repelling others, that just didn’t happen.

Price, it appears, becomes less critical when you offer a good product (especially when it’s just a fraction of what a traditional pay-TV bill is).

MOBILE A CRUCIAL COMPONENT OF GROWTH AND STRATEGY

Mobile continues to be a significant driver of online video adoption, according to Ericsson’s latest ConsumerLab study. In fact, according to the report, mobile video viewing has increased four hours a week in the past four years globally, while traditional TV viewing time has decreased 1.5 hours. Yes, Millennials are behind much of that growth as well — not surprising considering they’re the world’s largest demographic.

AT&T this month launched its own major play designed to attract Millennials and other cord nevers and cord cutters: DirecTV Now, which offers 100 channels for just $35.

AT&T already has weathered the total disruption of its landline business by mobile telephones, pivoting to become the second-largest wireless carrier in the U.S. It’s looking to do the same with DirecTV Now. CEO Randall Stephenson has acknowledged that he expects DirecTV Now to heavily cannibalize AT&T’s existing U-verse and DirecTV pay-TV businesses. And, he said, that’s fine because, “that means you’ve found something the market really, really wants.

Verizon, meanwhile, which is hoping to rebound from the underwhelming traction of its own mobile TV play — Go90 — is bracing for major changes. CEO Lowell McAdam recently told a conference audience that, if he had a choice, the only thing Verizon would offer would be skinny bundles.

“The 300-channel bundle is going to go away,” said McAdam. “Customers don’t want it.”

SERVICES TARGET MILLENNIALS

Meanwhile, Millennial catchers abound. Sling TV. CBS All Access. HBO Now. Even the NFL has gotten into the game, partnering with Twitter to stream its Thursday Night Football broadcasts.

But, all of these Millennial catchers are seeing an interesting side effect: They’re attracting more than just the 18- to 34-year-old viewers they were targeting.

In the U.K., eight months after YouView launched with a connected DVR, children’s programs Peppa Pig and Mickey Mouse Clubhouse were two of the most-streamed shows.

Similarly, Sony PlayStation Vue CEO Dwayne Benefield said recently that Vue also was engaging with families more often, noting that Mickey Mouse Clubhouse is one of its most watched programs, too.

And, as one poster on a Sony Vue message board recently wrote:

“Oldster here with Millennial kids and Roku father’s day gift (w/MLB subscription!). Learning curve has been short and enjoyable and trading cable bill of $115 for $35 Vue is great.”

Sling TV CEO Roger Lynch has repeatedly said the streaming service is chasing the 21 million homes in the U.S. without a pay-TV service, about 5 million of whom are cord cutters. But pay-TV operators are seeing their subscriber base decay at more than 1% annually, creating an increasingly appealing audience for OTT.

“We see that shift as a large opportunity for us,” Lynch said.

So, increasingly, do other players in the space.

As CBS chief Les Moonves said during the company’s Q3 earnings call, the network plans to grow its audience by appearing on as many OTT services as possible (including its own) because, “the more people are exposed to these platforms, the more they like them. We’re growing our audience by delivering our content in the way that viewers want it.

Stay tuned.

Follow me on Twitter @JimONeillMedia and on LinkedIn

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