The rise of subscription video on-demand services, SVOD, has become increasingly popular to the point that homes are beginning to have multiple SVOD services. The homes that have a combination of Netflix, Hulu, Amazon Prime, or another service are being referred to as “self-bundlers”. GfK, the consumer/market researcher, conducted a recent survey to show that homes with multiple SVOD services has increased to 16%, up from 10% three years ago. The survey found that 49% of the population subscribes to at least one of the main three, Netflix, Hulu, or Amazon Prime, while 17% of self-bundlers are subscribing to Netflix and Amazon, 9% are subscribing to Netflix and Hulu, and 5% have all three. What may be of interest to advertisers is the income level of self-bundlers compared to the average weekly viewers. Self-bundlers have a higher average mean income of around $90,000 per year compared to $76,000 per year for TV viewers. This can be used against the argument that cord cutters are those who have lower incomes than the average TV viewer. Advertisers can also look at a key demographic – age. Self-bundlers are more likely to have children under the age of 18 (50%) than TV viewers (41%). With the rise in SVOD services, one would think that live TV would take a drastic hit, but that does not seem to be the case.
According to Nielsen’s second-quarter 2016 Total Audience Report, live TV declines are starting to level off. The average time spent per adult per day for the 2nd quarter of this year was at four hours, nine minutes watching live TV, which is down two minutes from 2015 2nd quarter. This is still a decline, but when looking at the difference of the 2nd quarters of 2014 and 2015, there was an eight-minute decline. The report also finds that the average number of channels viewed per month this year is at 19.8 compared to 19.9 last year. Therefore, cord cutting may still be happening, but only to the channels that the viewers are not tuning in to. When looking at the household’s with SVOD services, they watch an average of one less channel, 18.6, compared to the national average, 19.8, but studies have shown that majority of SVOD service homes are younger and have higher incomes. This demographic has proven to watch less television correlating to fewer channels needed.
The change to multiple SVOD services will obviously have an effect to live TV, but also with each other. David Tice, SVP of media and entertainment at GfK, states, “The last one to price increase party may be the first once cancelled – so individual streaming services need to consider competitors plans before instituting price hikes”. As the SVOD market is expected to double within the next five years, this will generate a stiffer competition for industry leaders. Netflix has already increased price subscriptions and Hulu is expected to offer the same amount of content as Netflix, one has to wonder if self-bundlers will continue to see an increase. Either way, SVOD is here to stay and advertisers will have to begin balancing between SVOD services and live TV.