Global Marketing Monitor: Weekly Market Trends (August 14, 2021)

POV’s
August 14, 2021
Brian Wieser

WHAT YOU’LL READ ABOUT THIS WEEK:

We take a deep dive into the consumption of streaming services looking at new current data for the likes of Netflix, Disney+, Hulu, YouTube, HBO Max, ViacomCBS’ Pluto, Fox’s Tubi and others, including a look at the relative trends of AVOD vs. SVOD or other forms of streaming content. Understanding the evolution of these services is important to global marketers because of how they will impact the utility of television as an advertising vehicle as well as how marketers will need to organize their media budgets in the future.

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This past week we saw new data from Disney as it reported results for its most recent quarter. The company was always an important player in the media industry of course, but it’s arguably more important than ever because among the US-based traditional media conglomerates it is more uniformly focused on transitioning its business towards one centered around streaming services, and because it is doing so globally.

For the period ending July 3, there was significant growth for Disney+ in India and Indonesia, where the Disney+ Hotstar added around 10 million new subscribers to end the quarter with 45 million. Globally the overarching Disney+ brand had 116 million subs vs. 104 million at the end of March. Slow growth aside from Hotstar was likely impacted to some degree by the “pull-forward” of demand throughout the earlier phases of the pandemic. Disney did see more meaningful growth from Hulu, whose SVOD service in the US rose to 39 million subscribers, up from 38 million in the prior quarter and 32 million one year earlier.

Merely focusing on subscriber levels only tells us one part of the picture related to how consumer trends are evolving and how marketers will need to evolve their actions in response. Over time we expect that as Disney, Netflix, Amazon Prime and Apple lead with ad-free offerings and invest aggressively in original programming in countries around the world, they will have the effect of causing other streaming services to keep low ad-loads. As they invest in content produced in a wide range of languages and establish local production capabilities, these investments will collectively take meaningful audience shares from incumbent broadcasters who are unlikely to sufficiently increase their own spending on programming. Beyond the growing influence of US-based media companies as direct global sellers of advertising and content, the main consequence for marketers is that reach and frequency will become even harder to manage in the future than it is today, forcing widespread reassessments of the processes used to manage media budgets.

Unfortunately, the data we most need to monitor this evolution is typically difficult to observe because it typically doesn’t exist, or if it does, it is not measured with the same rigor that is applied towards measuring traditional TV. In the US, which is one of the most mature markets for streaming services globally, for many years Nielsen has collected data on internet-connected device-based consumption from its core national panel. However, this information only provides us with a high-level view of what we need to know, primarily as the measure does not include more granular media-owner level information. To go deeper, Nielsen has established Streaming Video Ratings based upon a sub-sample of its national panel with data generally available from November of last year. We had the opportunity to review this data in some depth, and the following were among the key insights we found

Streaming content accounted for 28% of total TV consumption in 2Q21. Total streaming content consumption amounted to 28% of total TV viewing time during the second quarter of 2021. For reference, internet-connected device-based viewing, which excludes encoded programming such as conventional television delivered via vMVPD, amounted to 24% of consumption during the same period. For reference, the equivalent figure in 2Q19 was 14% and 20% in 2Q20, and we would presume total streaming has tracked this trend. By contrast, ad-supported broadcast and cable accounted for 65% of viewing in 2Q19 and fell to 58% in 2Q20 before rebounding slightly to 60% in 2Q21 (although this still represented a 17% decline in absolute terms)
Viewing of streaming services from cable and satellite operators – including virtual MVPDs – accounted for only 3% of TV viewing in 2Q21. Total vMVPDs and MVPD (i.e. conventional cable TV) services delivered in a streaming form accounted for 10% of all streaming viewing in the quarter, and just under 3% of all TV viewing, incrementally rising over the course of 2021. This activity likely accounts for much of the difference between ICD viewing and total streaming. Interestingly, streaming viewing of Charter’s MVPD service is substantially higher than Comcast’s despite possessing a smaller footprint. Total viewing at Charter, around 1 billion hours in the most recent quarter, is just under 1% of total TV consumption despite Charter’s footprint covering around 20% of pay-TV homes, implying that approximately mid-single-digit percentage of Charter’s consumption is delivered over the top. We can infer that a smaller share of Comcast’s viewing is delivered similarly.
vMVPD subscribers are very light TV viewers. Looking at vMVPDs, we first note that based on their most recent public disclosures for the end of June, Disney’s Hulu had 3.7 million subscribers and Dish’s Sling had 2.4 million subscribers. Philo announced late last year that it had 800,000 subscribers at that time. Interestingly, looking at Nielsen’s July data which captures all three vMVPDs for the first time, Sling had 137 million hours of consumption. This would equate to less than 60 hours per subscriber during the month. Such a figure would be significantly below-average levels of viewing at the persons or household level, but on the other hand, Sling may attract light TV viewers in the first place. Philo’s viewing levels are even lower at 34 million, although as its current subscriber count is unknown it’s difficult to say with certainty that viewing among their subscribers is what it appears at closer to one hour per day. Hulu’s viewing is similar to the level noted for Philo, although as Hulu’s vMVPD subscribers also have access to Hulu’s SVOD service and all of that related content, Hulu’s total viewing is probably closer to Sling’s in total
The vast majority of YouTube consumed on TV sets is related to its core UGC platform rather than its vMVPD. From the above analysis on Hulu, Sling and Philo, we can reasonably infer that the vMVPD YouTube Live, whose viewing is entirely included under AVOD viewing (because the bulk of that activity relates to the core YouTube property) probably only accounts for a small share of total YouTube activity tracked. If YouTube Live had around four million subscribers with usage trends that mirrored Sling’s, that would indicate around 200 million hours of consumption, or close to 10% of the 2.5 billion hours of time spent on YouTube during July.
Netflix is the biggest single premium player among SVOD services; Amazon is much smaller. Looking at two of the SVOD “giants”, Netflix had around 6.5% of all TV of viewing during the most recent quarter, while Amazon was credited with substantially less, or 2.3%. The Amazon figure is in many ways surprising considering the aggregation of content included here: not only is the ad-supported IMDB within this data, but so too is Amazon Prime Video Channels, which aggregates content from many other pay-TV services, and which is tracked as one entity in this data. Presumably viewing levels will rise with more original, exclusive first-run content, but a deeper library will surely help. Both factors undoubtedly contributed to Amazon’s recent announcement that it had agreed to buy MGM.
Disney+ has almost as much consumption as Amazon’s array of services (including IMDB). Amazon’s scale is almost as notable in comparison to the relative upstart Disney+, which by itself has 1.5% of total TV viewing. Interestingly, if we added all viewing on Disney+, which amounted to 1.6 billion hours during the most recent quarter, or around 20% of all traditional Disney-owned network viewing, total viewing on their properties would have been stable over the past few years. Viewing on Disney+ is also growing rapidly, with an increase in consumption equating to 40% on an annualized basis between December and July. This highlights a broader point about the substitutability of streaming services for traditional TV, albeit with higher quality content for consumers, much higher costs for media companies and fewer advertising opportunities for marketers. As a reminder, Disney’s strategy around the world has been to disinvest in its traditional networks and shift consumers towards its streaming services as the company plows programming spending into those services instead.
HBO Max = half of Disney+ levels of usage, but probably need to be considered in the context of total HBO and related content consumption. At HBO Max, where data was broken out beginning in July, we can see that service had viewings that were about half of Disney+ levels at 322 million person-hours. This viewing could be placed in the context of total traditional TV consumption of HBO and Cinemax properties, which amounted to 2.2 billion hours in the second quarter of 2019 and 1.1 billion hours in the second quarter of 2021. Of course, this data does not capture traditional cable-based video-on-demand viewing of those services, which presumably represented a significant share of their totals. However, as “AOT” (All Other Tuning, a grouping of traditional TV formats including VOD) has fallen much as the rest of TV has from pre-pandemic levels, it may be that HBO and its properties have lost viewing shares to other premium services.
AVOD content as defined here is mostly YouTube. AVOD equates to 7% of all TV viewing or 12% of ad-supported TV. All AVOD service activity had 7.4% of TV viewing as defined in the streaming ratings data, although it would be somewhere between 6.5% and 7% excluding the YouTube vMVPD. If we only look at ad-supported traditional TV consumption via broadcast and cable networks – which, in its traditional form amounted to around 67 billion hours in the most recent quarter – the nearly 8 billion hours of consumption of AVOD is around 12% of this total. However, excluding all YouTube, the rest of AVOD would amount to just over 2% of total ad-supported TV consumption, with Pluto the biggest followed by Tubi and then Roku. All other AVOD pure-play content offerings are substantially smaller by comparison as tracked here.
Hulu accounts for 3% of TV viewing and 5% of ad-supported TV viewing, similar to its share of ad revenue. Hulu’s SVOD service has advertising and would be incremental to the AVOD figures, representing around 3% of TV viewing. Of course, within SVOD services Hulu is a significant source of advertising inventory, as most of its subscribers access the ad-supported version of the service. In terms of usage, Hulu’s core service represented 3.1% of total TV viewing in the most recent quarter. Disney does not break out ad revenue specifically at Hulu, it is the primary component of what the company discloses as DTC advertising, which is on pace to generate more than $3 billion in ad revenue during the current calendar year, on par with a major broadcast network in its own right and equivalent to nearly 5% of total US television advertising, similar to the share of ad-supported content consumption Hulu would represent if all Hulu viewing was among ad-supported subscribers.
Tubi and Pluto remain small relative to all TV, but each represents important incremental sources of inventory for their parent companies. Among the FAST services, with Tubi and Pluto in particular we see two separate entities which each capture around a half percentage point of all TV consumption, with Pluto regularly ahead of Tubi by around 20%. Total hours of consumption for Pluto in the most recent month was 224 million and 163 million for Tubi, or 594 million and 486 million, respectively, in the most recent quarter. Tubi’s figures can be contrasted with data provided by their parent company, Fox, whose management stated that in the last quarter the service had 900 million hours of consumption. Differences may be explained in the gap between content served vs. viewed, international usage set-top box streaming, mobile and PC usage or other factors. Looking at these properties in the context of their parent companies’ other properties, based on Nielsen’s data, we can see that during the most recent quarter Pluto consumption was equivalent to around 5.7% of total time with ViacomCBS content, and Tubi was equivalent to around 8.6% of total Fox traditional TV consumption.