Plans & Pricing
Does My Company Subscribe?
On the video subscription front, Q2 2015 was slower than Q1, which saw a flurry of new announcements, according to a new eMarketer report, “Q2 2015 State of Video: Monetization, Audience, Platforms and Content.” However, notable activity included cable TV network Showtime unveiling a new standalone service and YouTube confirming long-rumored plans to launch a subscription tier.
These over-the-top (OTT) product launches come at a time when US consumers are showing a growing appetite for a la carte content and digital subscription services. A Deloitte study of US pay TV subscribers in 2014 found that a majority preferred to subscribe only to the channels they watched regularly. This was not the case two years earlier, when 50% of subscribers preferred to pay for a package of channels, even if they didn’t watch all of them on a regular basis.
In research published in April 2015, Hub Research found that subscription-based streaming services such as Netflix, Amazon Prime and Hulu’s paid version (Hulu Plus) were the most common way of viewing digital movies and TV shows among US digital video viewers from 2013 to 2015.
The same study found that Netflix, Amazon Prime and Hulu Plus had all increased their subscriber bases from 2013 to 2015, in some cases substantially. In 2015, the percentages of respondents who used those services were 65%, 45% and 26%, respectively. The corresponding figures for 2013 were 50%, 31% and 20%. (Since publication of the Hub Research study, Hulu has dropped the Hulu Plus brand and consolidated its free and subscription services under the flagship name.)
In Q1 2015, Netflix grew its US paid streaming subscriber total by 6.9% quarter over quarter, from 37.70 million to 40.31 million. In other countries, Netflix’s streaming subscriber gains were even steeper. The company reached 19.30 million paid streaming subscribers outside the US in Q1 2015, up 15% over the Q4 2014 total of 16.78 million.
Netflix’s worldwide streaming subscription revenues were also up in Q1 2015. Total streaming revenues reached $1.40 billion, a 31.4% jump from Q1 2014. Although the US market represented 70.3% of the streaming total in Q1 2015, most of the growth came from outside the US. The year-over-year growth rate in markets excluding the US was 55.5%, while US growth was 23.3%.
Despite the popularity of subscription-based streaming, the new wave of OTT services raises questions about how much consumers might be willing to spend on these services. Already, a set of subscriptions to a handful of OTT offerings could approach or exceed the price of a cable or satellite TV package. That scenario would eliminate cost savings as an incentive for consumers to cut the cord.
Networks, media companies, multichannel video programming distributors (MVPDs) and others will need to seriously ponder these issues as they launch standalone services.
eMarketer corporate subscription clients can view the full report here.
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