OTTs: The SVOD battle intensifies

The streaming wars have intensified over the past 12 months, with the launch of a string of high profile SVOD platforms. A year ago, all the talk was about which platforms would survive and thrive alongside market leaders Netflix and Amazon Prime Video. 

Launch plans were being primed for high profile services from Disney+, Apple TV+, HBO Max, Peacock and Quibi, with millions set aside for marketing and promotion. Since then millions of new subscribers have signed up to one or more of the platforms.  

IBC365 rounds up the performance of each service since launch and looks at the impact on existing streamers. 

Quibi 
Short form, mobile first platform Quibi raised $1.75 billion prior to launch but has struggled since its debut on April 6. Yesterday, the Wall Street Journal reported that it was “exploring several strategic options including a possible sale”.

Sensor Tower, an analytics firm that tracks app downloads, says only 72,000 of the 910,000 people who downloaded the app within the first three days of Quibi’s April 6 launch became paid subscribers after their 90-day trial ended.  

Quibi insists that Sensor Tower’s numbers are “incorrect by an order of magnitude” and that it’s seeing “excellent conversion to paid subscribers.” The platform says it has 5.6 million downloads to date but has not shared how many of those downloads have resulted in paid subscriptions. Quibi recently reduced its trial period to two weeks. 

“The idea of a short-form made-for-mobile video platform is new and experimental,” says Tingting Li, analyst at Ampere Analysis.

“The initial goal of Quibi was to get audiences to watch its content on the move, such as during commuting, so in that sense the impact of Covid-19 has been significant for Quibi, as such activities were greatly reduced and access to its content on TV is limited. In addition, the content itself has also received a mixed reception and downloads are lower than expected. All these elements resulted in the initial uptake being lower than anticipated.” 

Enders Analysis senior TV analyst Tom Harrington says the use case for Quibi was not proven before launch. Unlike other streaming newcomers, Quibi launched with a completely new kind of content. “They spent an immense amount on content, but never really knew if it was going to work.” 

• Read more: 2020: The year of the OTT 

Disney+ 
It could be argues that Disney+ sits at the other end of the scale; the service has been a runaway success since launching in the US in November 2019, with a key expansion into Europe in March. 

Disney+ had more than 60.5 million paying subscribers by 4 August, according to The Walt Disney Company’s CEO Bob Chapek, who said that growth is “far exceeding our initial projections for the service.” 

Enders Analysis Tom Harrington calls the launch “an existential development” for Disney. “They have put their entire company behind this.”  

Timing played a crucial part in the success of Disney+’s European launch, which came just at the start of Covid-19 lockdowns. Ampere’s Li says audiences were craving more entertainment to subscribe to as lockdown began, helping Disney+ to gain momentum in Europe. 

Li says Disney+ has done “especially well” since launching. She also puts its success down to the high awareness of the Disney brand, as well as its tactical bundling to expand its reach - both with pay TV and mobile providers (such as its US deal with Verizon, or Canal+/Movistar/Deutsche Telekom in Europe), and also with other Disney VoD Services, such as the Hulu/Disney+/ESPN+ bundle in the US. 

There has been criticism that the library of Disney content is not as deep as rivals, and this could affect the service in the long run. The weekend that Hamilton came to the service, downloads of the Disney+ app reportedly shot up by 74% compared to previous weekends. “If one programme can have such an effect, that shows the scarcity across the library,” says Enders Analysis’ Harrington. “But it is very early for Disney, and they are spending a lot of money on content and this is a long term play.” 

HBO Max 
Launched on 27 May, HBO Max - the new direct-to-consumer VoD service for AT&T’s WarnerMedia content - is currently only available in the US.  

Subscribers to HBO automatically have access to HBO Max, giving it a leg up in terms of subscriptions. The company finished the second quarter with 36.3 million US subscribers for HBO Max and HBO combined, up from 34.6 million at the end of 2019. 

One month after launch, HBO Max said it had about 3 million retail subscribers. An additional 1.1 million HBO customers activated HBO Max accounts, bringing the total to 4.1 million subscribers. 

AT&T predicts that HBO Max will have 50 million customers in the US by 2025. 

With a subscription fee of $14.99 per month, HBO Max is one of the most expensive SVoD services in the US. Ampere Analysis’ Li says: “HBO Max has two core targets with subscriptions – the first is “activating” existing HBO channel or HBO Now subscribers to start using the service, and have current customers derive value from all the additional content; while the second is to use the additional Warner/Turner content within the service to grow its subscriber base beyond the traditional HBO audience, particularly amongst young families.” 

HBO Max’s content strategy focuses on premium or popular content, with a lot of high-value content available, choosing to build on the reputable HBO brand which has come to be associated with high quality programming. It currently plans to roll out internationally in existing HBO D2C markets globally – so primarily South America, parts of Asia and parts of Eastern Europe. Li notes: “Of the new services, HBO Max has the most upcoming TV series in commission, as they focus on original content for the service to entice subscribers – again with a mix of genres to further diversify the catalogue, such as reality and kids content.” 

Peacock 
It’s still early days for NBCUniversal’s Peacock, which was introduced first to Comcast subscribers in mid-April, before rolling out nationwide on July 15.  

Peacock, which offers a free basic service funded by advertising, reported hitting 10 million signups.  

There were no details about which of Peacock’s three subscription tiers viewers were signing up to: free, premium ad-supported service for $4.99 per month, or ad free for $9.99. 

Speaking on an earnings call at the end of July, NBCUniversal CEO Jeff Shell said the streamer’s early momentum “exceeded our high expectations.” 

He said the Peacock team is looking at three metrics: signups, monthly average users and monthly active accounts, which can include several users in a single home. And he said trends have been “better than expected” so far “across the board,” even though data on the other metrics will only be shared down the line.  

Peacock was meant to launch alongside the 2020 Olympics to provide a live stream for the Summer Games in Tokyo, but the linchpin event was postponed due to the coronavirus pandemic. Despite the major disruption, NBCUniversal managed to launch Peacock as scheduled. 

Harrington says that the delay in the Olympics should boost Peacock next year, and notes that its three subscription tiers are attractive. “It’s very, very competitive,” says Harrington, adding that its advertising load is light compared to traditional TV. Viewers see fewer than five minutes of ads per hour on both the free version of Peacock and Peacock Premium. By comparison, traditional TV networks in the US show an average of 11 minutes of commercials per hour. 

Peacock’s performance is all the more impressive considering it is still not available on two of the most popular connected TV platforms: Roku and Amazon’s FireTV. 

Apple TV 
It’s unclear how well Apple’s multi-billion dollar push into the streaming market has fared as the tech giant has not released numbers for the service, which is available free for a year for those who buy a new Apple iPhone or computer.  

Currently, Apple only offers a very limited selection of original content, among them the well received The Morning Show. 

In January, Ampere Analysis reported that Apple TV+ had over 33.6 million customers in the US alone – but that the vast majority were getting it for free. 

The challenge for Apple is keeping their customers engaged after their free subscription ends, and the platform’s limited content offer is likely to make this difficult to achieve. 

According to Bloomberg, Apple has been acquiring rights to older TV shows to build a back catalogue of content which could have the potential to compete with the likes of Netflix or Prime Video. It has also started acquiring films, such as the Tom Hanks’ WWII movie The Greyhound. 

A new survey out this month rated Apple TV+ as the least popular streaming service. 

The survey from Flixed found that compared to the other leading SVODs, Apple TV+ is seen as having the worst quality content, least amount of variety, and worst user interface.  

Impact on the establishment 
Despite competition from the new platforms, market leader Netflix has had a blistering 2020, adding 26 million paid new subscribers in the first two quarters alone.  

A Piper Sandler study published this month found Netflix subscribers are more likely to remain with the video giant post-pandemic, when compared with subscribers for rival streaming services and cable TV.  Netflix stock neared an all-time high after publication of the survey.  

Against the 41%of Netflix customers likely to remain as subscribers after lockdowns lift, Amazon Prime Video was second on the Piper survey list with 28% indicating they intend to stay loyal, followed by 17% of Disney+ customers,  19% of cable TV ,and 7% of HBO Max customers saying they will remain subscribers for the long haul. 

Ampere Analysis’ Tingting Li says that there has yet to be any evidence of the new studio D2C launches effecting incumbent international SVoD players, noting that subscriptions for existing services have continue to rise throughout the Covid-19 pandemic. 

“Disney+ has mostly attracted young adults and households with children, which are already core SVoD demographics, so its success has not instantly impacted incumbents such as Netflix and Amazon Prime Video as most viewers tend to add the service on top of an existing subscription, with service stacking rates continuing to rise.” 

Li adds: “Similarly for HBO Max, much of its initial subscriber base were already HBO subscribers, which doesn’t pose an immediate threat to Netflix and Amazon in terms of subscribers churning in favour of HBO Max.” 

Li explains that the impact of the new services will also vary by region. For example, it would be less obvious in some markets such as the Nordic countries where stacking is common and subscribers have more budgets for VoD.  

Perhaps the biggest impact of the new entrants is on traditional broadcasters.  

A recent Ofcom report showed that viewing of traditional TV and streaming surged as lockdown was announced.  

As lockdown measures eased towards the end of June, the uplift in viewing to video streaming services and other non-broadcast content held steady, at 71% higher than the year before.  

In contrast, by the end of June, traditional broadcast TV viewing declined from its peak in early lockdown – falling 44 minutes to 3 hours 2 minutes per day. “Broadcast TV viewing is now comparably lower than it was in 2014-2017, although it remains 11% higher than this time last year,” says Ofcom. 

Enders’ Harrington says: “There’s going to be a lot of people whose viewing journey will have changed during lockdown.” 

• Read more: 365 Playlist: OTT