A battle for video consumers in 2020
Consumers have found their video consumption groove, evidenced by three key trends:
However, this might be the calm before the streaming storm. As enticing new players enter the market and content libraries become more fragmented, consumers must prioritize and strategically manage their video service portfolios to ensure access to the content they want, or to even know what is available to them.
The question for consumers is no longer “How do I watch?”, but “What do I keep and what do I cut?” Services that don’t provide their audience with a clear value proposition and a seamless user experience run a real risk of attrition in the future.
Methodology: In October 2019, PwC surveyed a sample of 2,016 people in the United States, aged 18-59, with annual household incomes above $40,000. We analyzed our results against similar studies we administered from 2013 to 2018.
How will new streaming services shift marketplace and subscriber demand?
In 2019, those who had a tumultuous relationship with cable cut the cord, and those who have stuck with it say they recognize that it fulfills a need in their overall video portfolio. Total pay-TV subscribers has remained consistent at 68%, compared to 67% in 2018. The number of traditional pay-TV subscribers also has remained consistent year-on-year (YOY). In contrast, the number of cord-cutters has declined YOY for the first time in five years.
Netflix continues to dominate the market and surpass pay-TV in usage, but the company's growth has noticeably slowed in recent years. Amazon Prime and Hulu, on the other hand, continue gain market share.
Increasingly fewer pay-tv subscribers are solely watching TV through their cable subscription—77% are accessing TV content on the internet, up from 72% in 2018. Pay-TV users also account for the lion's share of streaming subscription growth:
Just two years ago, 60% of consumers said the video content space was more overwhelming than ever before. Today, the majority of consumers are decidedly happy: 76% say they are satisfied with their video subscriptions and 73% are satisfied with the quality of original content offered.
When asked specifically about the abundance of options in the streaming space today, consumers say they’re “happy,” “fulfilled” and “excited,” which suggests that most have curated an ideal combination of video content options for their needs.
A happy outlook persists even as the cost for video content rises. In recent years, consumers have been optimistic that video content costs would decline, but this year we see that trend reverse—on average, consumers are spending roughly $76 a month on video content, an increase of $5/month year-on-year.
When asked if they expect to pay more or less for video content one year from now, 60% said they expect to pay more.
There’s a general expectation that current services will continue to increase their prices, yet 33% of consumers expect to invest more in new services that are launching this coming year, and 21% are willing to pay more to gain access to ad-free content.
Bottom line—consumers are willing to spend more to get the content they want, which is good news for brands launching new streaming services. Half of all consumers surveyed indicated some level of interest in subscribing to at least one of the new video services being launched in the next six to 12 months.
However, unaided awareness of new streaming services could use improvement. When asked if they could name any new market entrants, 51% of consumers said they couldn’t think of any.
When prompted with brand names for level of interest, consumers are especially excited for Disney+, which isn't surprising given Disney's significant promotional campaign for its launch this past November.
It's important to note that streaming services scheduled for 2020 launch, like NBCU’s Peacock and WarnerMedia's HBO Max may not have yet ramped up their promotional marketing campaigns. In particular, we anticipate interest in Peacock to increase as more details emerge related to the likely ad-supported offering.
Consumers are largely interested in new streaming services for original and exclusive content. However, a closer look at individual services reveals some differences:
Though consumers are settled into streaming and are largely happy with today’s video content landscape, rising costs and an ever-greater abundance of options have brought us to the precipice of yet another great shift, in which consumers have the confidence to decide exactly what they want in their video service portfolio.
A quarter of all consumers are actively looking to unsubscribe from some of their services, citing a lack of need, perceived worth and making room for another service as top reasons to terminate.
Many consumers already know how to get the content they want, strategically maneuvering in and out of subscriptions to curate their library of content. This mindset may only increase in popularity as an onslaught of new services enter the market.
Nearly two-thirds of consumers who intend on subscribing to a new video service would terminate or downgrade one or more of their current subscriptions to make room for a new one.
Technology, Media and Telecommunications Partner, PwC US
US Entertainment, Media and Communications, PwC US
Technology, Media and Telecommunications Advisory Leader, PwC US