New research from Decipher has shown that Pay TV subscriptions have not only increased since 2012, but SVOD subscriptions are growing faster amongst Pay homes – and in particular those with Top Tier packages – than any other.
Decipher’s latest Mediabug report has thrown up the intriguing possibility that the arrival of SVOD services in the market may have actually helped, not hindered, the Pay TV market. The bi-annual analysis of 3,000 UK consumers tracks adoption and use of SVOD in both Pay TV and Free TV homes. This latest report shows that the total Pay TV base has continued to grow from 61% to 69% of the UK population over the last four years (FIGURE 1). During this time, SVOD usage in Pay TV homes has grown from 10% to 45%. This indicates than there is a growing cohort of UK consumers that are increasingly comfortable with both Pay TV and SVOD.
FIGURE 1: Analysis of UK Population by TV service in home and SVOD ownership, 2012 – 2016. (SOURCE: Mediabug Wave 1 – 9, Sept 2012 – Mar 2016, Decipher (n= 26,737). Data weighted to national proportions).
The same research shows that traditionally Free TV homes are equally resistant to the lure of SVOD apps and subscriptions. In Free TV homes, take up of SVOD was much less substantial; growing from 9% to 28% over the same period. While there are homes that use OTT apps and SVOD subscriptions to top up Free TV, it’s a much smaller segment than previously imagined and is not impacting the market for pay.
FIGURE 2: Analysis of UK Pay TV Subscribers by Package Tier and SVOD ownership, 2012 – 2016. (SOURCE: Mediabug Wave 1 – 9, Sept 2012 – Mar 2016, Decipher (n= 17,578). Data weighted to national proportions).
Mediabug also explored whether SVOD was causing Pay TV subscribers to downsize their Pay TV packages. However Mediabug analysis across the 4 main UK Pay TV providers indicated that not only had the top tier not substantially reduced in favour of basic packages since 2012, but top tier subscribers are picking up SVOD at a rate that far outpaced the other tiers (FIGURE 2).
The findings suggest that despite general concern about the impact of SVOD in major media markets, it is not playing out as expected here in the UK.
Director of Decipher Media Research Dr. Hamish McPharlin said: ‘Our consumer research is increasingly demonstrating that media decision making is not an ‘either or’ situation. Consumers sit along a spectrum of engagement with media entertainment, and are increasingly mixing and matching services to get the content they want, both live and on demand.’
Other Findings from Mediabug Wave 9 2016 include:
- The rise of the multi-SVOD home
While around 32% of the UK online adult population have either Netflix, Amazon Prime Instant Video or NOW TV, almost a third of this group subscribe to more than one. More than half of Amazon Prime Instant Video subscribers and NOW TV subscribers also subscribe to Netflix. And 1.9% of the online adult population subscribe to all three. Once again, the skew is toward Pay TV homes; with 84% of those with all three SVOD subscriptions also having a Pay TV subscription.
- New devices, including 4K, are making headway in consumer homes
27% of the UK now own a connected Smart TV, and 4% have one that is 4K. The new NOW TV Smart box also launched this year, and currently has 2% ownership.
- Sky Buy & Keep puts Sky Store ahead of iTunes
iTunes’ position as the service attracting the most regular purchasers has now been taken by Sky Store. 12% of the online population claim to have purchased a film or TV show from Sky Store in the last month. Interestingly, 6% of these purchased from Buy & Keep; the version of Sky Store that exists on Sky set top boxes. Without the B&K figures Sky Store would be at 8%, so evidence is mounting that the ability to purchase digital content directly on a set top box has traction, and is converted new digital transactors.
- Amazon Fire Stick continues its sharp growth in ownership and share of usage
While Chromecast penetration appears to have slowed, Amazon’s Fire TV Stick has added +5% penetration YOY, achieving 7% ownership this wave. Its usage has increased proportionally, with a +3% rise in Online VOD viewing share delivering a 5% viewing share compared to other devices. Smart TV’s remain dominant, holding their 18% share this year – a +2% rise YOY. Consoles and PC’s continues to lose share of VOD usage, however Smartphones appear to have recovered from a 2015 dip and have shown some growth; now achieving a higher share than PC’s and tablets. Perhaps large smartphones are the cause.