The Great Streaming Boom dominated video industry headlines during the height of the pandemic—the viewership growth was sharp and immediate. While its peak consumption gains eventually settled, its impact certainly accelerated streaming subscription growth and the overall pace of change across the video landscape to unprecedented levels. So, one year later, where do we stand? Which viewership changes and platform gains are here to stay, and which fizzled?
Read our six takeaways below to find out:
1. Disney+, Hulu, Netflix, and Prime Video were the biggest winners of the viewership boom, while Quibi and Apple TV are (so far) the biggest losers.
Streaming platform options have never been more crowded than they are right now. So how did we get here? First there was Netflix. Then Hulu. Then Amazon Prime Video, Apple TV Plus, Disney+ and… have you lost count yet? Don’t forget about HBO Max, Peacock, Paramount+, and the short-lived Quibi. Even Discovery recently joined the streaming landscape with its direct-to-consumer Discovery+ network, which offers both ad-supported and commercial-free versions.
With all this noise and competition, industry analysts love to position the influx of options as the “Streaming Wars,” a catch-all battle of media giants that will eventually produce a clear winner. But the reality is far more nuanced than that. Each platform offers a distinctly different experience, both in the content they provide and how they make it available, and all have unique end goals in terms of business models.
Still, some platforms did come out ahead amid the quarantine-fueled streaming boom. According to TV data aggregator Alphonso, total watch time of original series across major streaming platforms increased by more than 50% during the height of the pandemic, before eventually leveling back out to historical pre-pandemic levels by June 2020. But even with consumption leveling out, the boost to subscriptions this past year was pronounced and sustained. In terms of YoY subscriber growth in the U.S., the biggest winners during 2020 were Disney+ (40 million total, up 250%), Hulu (39 million total, up 39%), Netflix (73 million total, up 10%), and Amazon’s Prime Video (56 million total, up 5%). The growth of Disney+ is particularly impressive given its relatively recent launch in Q4 of 2019, but it should be noted that overall hours spent consuming content on Disney+ pale in comparison to some of the more established streaming services. And regarding 2020 newcomers, it’s also worth noting that WarnerMedia’s combined HBO and HBO Max subscriber base in the U.S. is currently at 44 million (though WarnerMedia doesn’t break out the specific number of HBO Max subscribers), and Peacock weighed in at the end of 2020 with a promising 33 million “signups” after launching in July.
The biggest losers (so far) were the short-lived Quibi platform, which ceased operation in Q4 of 2020, and Apple TV Plus, which has struggled to gain an audience foothold even with a fairly impressive lineup of original content. Apple TV Plus doesn’t disclose user figures, but a recent MoffettNathan study found that 62% of current subscribers are on free promotional offers extended to Apple hardware buyers, and 29% say they will not renew the subscription at the close of the promotional period. Ouch.
This year is bound to bring additional wins and losses with HBO Max, Peacock, and Paramount+ making big moves to catch competitors. But so far things are looking very good for the leaders of the streaming pack.
2. More age groups than ever are streaming video, with Boomers leading the pack in YoY viewership growth.
What was initially a medium heavily made up of young, tech-savvy, digital natives, has now become more reflective of the national population. Reaching all age demos, ethnicities, socioeconomic groups, geographic markets, and household types—OTT is clearly now for everyone.
In the past year, we have seen OTT move from an early adopter technology to the early majority phase of consumer adoption. According to a December survey by JD Power, Americans now subscribe to four streaming services on average. Their average combined subscription cost per month at the end of 2020 was $47, which is up from $38 in April of that year and represents a 24% increase in just eight months. U.S. consumers also spent around $35 billion on over-the-top (OTT) subscription services last year, up from $17.66 billion in 2019. This spending is expected to grow by 15% in 2021, and by 2024 it is projected that 78% of all U.S. households will have at least one SVOD subscription, totaling 270 million subscriptions nationwide.
So which age groups experienced the biggest viewership growth amid the pandemic? Baby Boomers took the top spot, increasing their streaming video consumption by more than 50% between Q3 2019 and Q3 2020, according to TV research firm Ampere. Nielsen’s latest Total Audience Report also shows that Boomers represented 26% of all streaming minutes viewed in Q2 of 2020, second only to older millennials and Gen X at 27%, and representing a 37% YoY increase in minutes viewed. Looking later into 2020, Nielsen’s recently-released Q3 data shows sustained levels of growth for older age groups in daily streaming minutes viewed; 50–64 year-olds watched 17 more minutes of streaming content per day in Q3 2020, representing a 43% increase YoY, and those 65 and older watched 10 minutes more per day of streaming content, a 23% increase YoY. Compare those numbers to younger audiences’ (18–34) YoY increase of just 2 minutes, or 2.5%, and the jump becomes even more pronounced. It’s also worth noting that older millennials and Gen Xers increased their daily streaming minutes by 23% YoY. But even with that bump, it’s clear that the older age groups led the field in terms of viewership growth, due in large part to the fact that their streaming viewership was at very low levels pre-pandemic. They had nowhere to go but up.
Another interesting nugget contained within Nielsen’s latest data is that for nearly every single age group, overall daily media consumption on “TV-connected devices” (i.e., consoles and internet connected devices) was one of the only formats that saw an increase YoY in Q3 of 2020. Most other media formats, including “live + time-shifted TV,” radio, and smartphone or tablet apps either saw decreases or hovered at around the same levels. Internet on a computer was the only other format that saw increased time spent YoY across all age groups, albeit at a lesser volume than TV-connected devices. Net-net: the continued overall growth in streaming viewership to now encompass a wider range of ages is certainly good news for advertisers looking to tap alternative and reach-extending inventory in the video space.
Most CTV viewers say that the maximum amount of subscriptions they would be interested in owning at any given time is four, and 47% of consumers are frustrated by the growing number of subscription services required to access the content they want to watch
3. The public values lower subscription costs via ad-supported plans, and library variety, when it comes to choosing a streaming service.
According to Alphonso, nearly 70% of streaming subscribers state that they prefer to use a service with lower fees in exchange for limited ads. That left just 30% of respondents feeling like premium “ad-free” environments were preferable. This trend is expected to continue as streaming marketplace options evolve, especially once more robust streaming bundling (i.e., Cable 2.0) hits the marketplace and monetizes with support from ads alongside of subscription costs. And considering that many consumers have been well conditioned by cable and broadcast to accept video ads, it’s no surprise that ad receptivity continues to look fairly healthy across streaming environments, especially as more age ranges join the subscriber ranks.
Though value is not the only primary influencer when it comes to choosing a service. Large content libraries are equally prioritized by many, taking the top spot as the biggest driver of streaming provider choice across some of the most popular platforms (Netflix, Prime Video, and Hulu). Disney+ fans also listed library size as a top-two motivator for subscribing, though said their most important loyalty factor was “family-friendly content.” But a subscription reckoning is looming on the horizon in 2021, as subscription fatigue has consumers longing for a one-stop shop that satisfies their content preferences while also making it easy to discover new programming.
For evidence of this, look no further than the current à la carte dynamics. At the moment it’s typical for consumers to own multiple subscriptions, also known as a “subscription stack.” As mentioned, the average cost spent on subscriptions is currently $47, but some on the high end are paying up to $69 a month in total, with a select few spending beyond that threshold. Since canceling is easy, subscribers may alternate between services, going wherever new content is added. Kantar found that more consumers who added one service were cancelling another, called “subscription switching,” and said 10% of new subscriptions were the result of switching, up from 9% in the second quarter of 2020. A Deloitte study also found that by Q4 of 2020, almost half (46%) of people subscribing to a streaming service had canceled at least one in the past six months, up 130% from early Q1. Most CTV viewers say that the maximum amount of subscriptions they would be interested in owning at any given time is four, and 47% of consumers are frustrated by the growing number of subscription services required to access the content they want to watch (48% say it’s now harder to find their favorite content given all the options). This factor of fatigue is going to be a continuing issue to monitor in the coming year, and is bound to result in some changing of the ranks in terms of service popularity and subscription incentives as companies continue to refine and improve their offerings.
4. Cinema and TV will continue to blend together, but more symbiotically than originally thought.
With the pandemic continuing to disrupt global theatrical attendance and distribution, the performance of streaming-released movies is being watched closely. Streaming companies, especially Disney+ and HBO Max, have already been capitalizing on their ability to offer blockbuster-level original content to fuel their customer acquisition strategies. While original content may be a proven hook to acquire new subscribers, it can also help to bolster long-term customer retention.
Several big streaming players jumped into the cinema new release game in 2020, writing large checks to feed the streaming audience beast. Amazon, for one, is on a movie-buying spree. It purchased Coming 2 America for $125 million, which proved to be the streaming giant’s biggest success in terms of opening weekend views (1.25 billion minutes) and delivered Prime Video its first number one spot in Nielsen’s weekly Top 10 SVOD rankings. Borat Subsequent Moviefilm was another Prime success, premiering earlier in October of 2020, garnering a very healthy 507 million minutes viewed across its opening week. Not to be outdone, Disney+ also got in on the cinematic action last year, debuting Mulan on Labor Day weekend of 2020. The premiere clocked 525 million minutes viewed, on par with competing releases at the time, and also particularly impressive given Disney charged its subscribers an additional $30 for first access to the film.
But perhaps the biggest bombshell of all came from WarnerMedia at the end of 2020, when it announced that all of its 2021 films would be released simultaneously across both theaters and its HBO Max streaming service. This kind of choose-your-experience approach has monumental implications for the future of movie releases, and if it proves to be successful, will certainly establish a standard that competitors like NBC Universal, Disney, and ViacomCBS are likely to mimic.
So how is HBO Max’s experiment going so far? Pretty good, all things considered. Take Wonder Woman 1984, which netted 2.25 billion minutes viewed over opening weekend (Christmas), and was the strongest opening weekend performance for any streaming film in Q4 2020 according to Reelgood data. Though it should be said that while Wonder Woman had a strong performance on streaming, its opening weekend box-office numbers were less stellar, netting just $148 million globally ($37 million in the U.S.) while costing $200 million to produce. Of course, box office numbers must take into account the fact that stay-at-home dynamics were still in play this past December, keeping many families out of theaters. That’s why looking at a more recent HBO Max blockbuster, Godzilla vs. Kong, shows the true promise of WarnerMedia’s strategy.
Godzilla vs. Kong, released March 31, was the streaming services’ most watched film to date, with 3.6 million households watching in the first five days (minutes viewed are not yet available, but for comparison, Wonder Woman 1984 saw 2.2 million households watch during its first five days). But beyond being a smash at home, it also delivered the goods on the big screen, bringing in $48 million during opening weekend. It’s currently on track to net $390 million worldwide, which would generate a profit of at least $160 million, and has already become the highest-grossing film since the start of the pandemic. Obviously Godzilla vs. Kong benefited from good timing considering vaccine accessibility in the U.S. and more theaters opening up in larger capacities. Still, its symbiotic success story is a promising case for WarnerMedia’s 2021 approach to cinematic releases—even if that approach is likely to evolve as the public’s “re-emergence” continues.
5. Online privacy battles will increase the importance of ad targeting data across the streaming ecosystem, especially given its recent viewership gains.
The “Streaming Wars” are not only about subscription stats and subscriber discounts. It’s about the platforms’ long-term goals and the reason why every media and technology company is fighting over the same thing: the direct customer relationship, and the valuable data that comes along with it. Companies like WarnerMedia, ViacomCBS, and others are no longer just competing with one another. Their biggest competitors have also become the platforms that distribute their standalone OTT applications. Device makers, streaming apps, and content producers each want a piece of the ad revenues and user data that are associated with streaming. And as more money flows into video streaming given recent gains, the battle over who controls user data and ad inventory is becoming more intense.
In any case, the ability to collect and analyze OTT consumer data is a win for all platforms, especially in a time when alternative digital targeting options are going through a sea change with the sunsetting of third-party cookies and a push from device makers (e.g., Apple) to prioritize opt-in consent for individual user tracking across apps. With this lens in mind, the importance of streaming video is certainly enhanced, given its opt-in subscription models are currently less scrutinized when it comes to privacy concerns. And with the continued expansion of new streaming platforms, brands that typically advertise with broadcasting giants like NBC can now benefit even more from the brand-safe content they are used to but enhanced with better audience targeting from the range of Peacock’s digital distribution channels. Peacock will be an advantage for Comcast to expand its first-party data within its ecosystem, an increasingly critical asset that other networks need to emulate to better compete with the “legacy” digital ad giants. AT&T’s aggregated data assets collected across its mobile, internet, and TV business lines also bring significant value for advertisers increasingly focused on precisely-targeted ads. With the decision to allow inventory from other media companies, AT&T will aim to scale ad revenue (via its advertising arm, Xandr) in parallel with subscriber growth.
And speaking of “legacy” digital video giants, Hulu has been a leader in OTT ad targeting for years, allowing for precise household targeting across genres, demographics, and geography. What’s more, Hulu offers subscribers better control over advertising experiences than many streaming competitors, sometimes allowing viewers to shape how they prefer their ads to be served (i.e., upfront longform, versus intermittent spots). The streaming service has also been expanding its inventory as of late. Just prior to the pandemic, Hulu announced the release of new static pause-screen units that would appear as subtle banners when a viewer takes a break. Brands are able to select the type of show or movie they’re comfortable appearing next to (i.e., excluding TV-MA content) to ensure brand safety, and the ads themselves won’t include sound or motion to ensure the ad experience isn’t unpleasant. Hulu also claims this type of increased inventory is aimed at producing more non-disruptive experiences, stating that the goal is actually to reduce the amount of ads which interrupt content. And for ads that do interrupt content, Hulu has branched out beyond the standard video spots to also offer units that are more interactive and fun (i.e., trivia units). Hulu’s primary goal is to keep its ad-subscription users happy, given these data-rich audiences and resulting revenues are the lifeblood of its business model.
Consider also that even ad-free streaming environments like Disney+ present some benefits to marketers. That’s because Disney+ consumer data also improves targeting for advertisers on Hulu, ESPN+, and Disney’s successful linear TV channels. These synergies make Disney+ a different animal than other streaming players. In trying to understand the revenue strategy of Disney+, it’s important to look at it as a piece of something much larger, where subscriber growth may be prioritized over direct revenue for the foreseeable future, and advertisers can still reap improved targeting benefits across other platforms and environments. All in all, the future of consumer data access and performance measurement across OTT is fairly rosy, fragmentation aside.
6. Content rights battles, profitability dynamics, and ad inventory scarcity will continue to be big factors to watch in the coming year.
Besides accessibility and device issues, a streaming service is, at its core, only as good (and sustainable) as the content it offers viewers. It’s a factor as old as the video medium itself. The top services will be those that have the highest concentration of content that truly engages with audiences, and the fight for control of that content, along with spending on new original content, has only heated up in recent years as traditional media and broadcast conglomerates join the streaming wars with their own platforms.
Netflix’s situation provides a great example of the latest challenges. Out of all the streaming services, Netflix is currently the one that viewers spend the most time with (two hours per day). In Q2 of 2020, Netflix accounted for about one-third of total time spent with streaming services in the U.S. But that’s not to say everything has been all rosy for the legacy streaming platform. As more content producers launch their own services, and rights contracts expire, they have lost a significant amount of licensed content. Major network shows like Friends, The Office, and Scandal, along with sizeable chunks of content from powerhouses like Disney and Paramount, have been disappearing from the Netflix library as ownership rights heat up. Fortunately, Netflix pivoted to original content a while ago, but those originals cost more upfront money than licensing an old sitcom or film.
In recent years, Netflix has blazed through cash like a wind-backed fire. In 2019, it generated a cash loss of $3.5 billion with the driver of its cash problem being hefty content costs—which have hovered around $16 billion (money largely financed by debt obligations). Assuming Netflix content continues to attract more subscribers, all should be well and good. In fact, Netflix recently claimed that it’s finally at a point where it doesn’t need to borrow money to finance day-to-day operations. The concern is, if it stops growing, it will not be able to meet its debt obligations and will quickly throw the company into bankruptcy. Netflix announced last year that was raising another $1 billion in cash via debt offerings to acquire and produce new content. It’s a tactic that the streaming giant has relied on for years, but as shockwaves from the economic crisis continue to be felt, and more competition puts the squeeze on potential subscriber growth, many wonder whether Netflix’s approach is a sustainable model in the long term.
Besides Netflix, cash is also flowing in big numbers elsewhere in the streaming sphere. The latest budget figures show that Amazon Prime Video and Apple TV Plus lead the pack, with a projected $6 billion and $5 billion, respectively, earmarked for content acquisition and production. While not $16 billion, these sums are certainly hefty. Still, they make sense, given that Amazon and Apple’s outside revenue streams and business models can support this level of investment spending, and that they’re also among the platforms with the most at risk in terms of library strength once Comcast, ViacomCBS, Disney, and WarnerMedia, among others, finish locking down control of their shows and movies. Disney-owned Hulu is the only other streaming player spending close to the same as these giants, clocking in at $3 billion last year. But Hulu has been on a more sustainable path for quite some time, generating $1.5 billion in ad revenue and $2.9 billion in subscription revenue last year alone, and netting it a profit of $600 million. Disney, Comcast, ViacomCBS, and WarnerMedia are all spending $2 billion or less on content, which again, goes back to their healthy backlog of content and continued testing-of-the-waters approach with original series.
But beyond production spending and the fight for content rights, there’s another big elephant in the room for advertisers that only some are talking about. Even with all the growth in streaming viewership over the last year, streaming ad inventory is still fairly scarce in comparison to linear and other digital video options. That’s because a majority of streaming viewership still occurs in ad-free platforms, even with the expansion of more ad-supported environments. Some recent figures from Nielsen and Simulmedia show that 24% of TV viewing time is now spent on streaming media, but also claim that only 4% of the ad-viewing time on TV comes from streaming content. This imbalance, along with streaming’s targeting capabilities, is causing some premium pricing for available streaming inventory. And while expanding ad-supported options are sure to improve the picture, we’re still a ways away from enough inventory opening to balance the linear versus streaming pricing scales.
So, The Great Streaming Boom brought even more changes to this evolving space—some worth celebrating and others worth scrutinizing. Maybe the only thing we can say with certainty is that the mind-numbingly fragmented landscape is due for a big reckoning in the near term.
The good news? Audiences are engaged and along for the ride, even if they want more simplicity. That’s offering brands more opportunities than ever to think creatively about how to engage their customers in increasingly targeted and data-driven ways.