Advanced Television

Digital TV, movie streaming reaches tipping point

April 3, 2013

US digital TV and movie content audiences will grow faster than previously expected as a result of increased viewing on tablets and smartphones, a wave of Internet-enabled TVs, and greater content availability, according to a new report – Digital TV and Movie Streaming: A Rising Tide of Devices, Content and Viewing – from digital marketing insight specialist eMarketer.

The number of US digital TV viewers will reach 145.3 million in 2017, up from 106.2 million in 2012, according to eMarketer. The February 2013 figures represent increases ranging from 5.3 per cent to 9.3 per cent more than the corresponding figures in its August 2012 forecast. Digital TV viewers will cross a critical tipping point in 2014, surpassing 50 per cent of the US Internet user population.

Belkin and Harris Interactive surveyed US Internet users on their willingness to replace cable TV with digital media subscriptions and found that 12 per cent strongly agreed with the statement: “I would consider replacing my cable/satellite subscription with a streaming media subscription (e.g., Netflix, Hulu Plus) in 2013.” Another 18 per cent said they somewhat agreed, indicating that a total of 30 per cent of respondents were inclined to at least consider cord-cutting.

As more people in the US watch digital media on a growing range of devices, streaming services are stepping up their competition for subscription and advertising dollars.

eMarketer notes that Netflix and Redbox are committed to monthly subscription plans, while Hulu offers both fee-based and ad-supported tiers. Amazon is using a membership plan tied to its Prime loyalty programme as well as an à la carte tier, while Apple and Wal-Mart are concentrating on the latter model. Others, such as Sony’s Crackle, are using strictly ad-supported access, and premium pay TV content channels such as HBO, Showtime, ESPN and Viacom are extending access to existing subscribers via authentication models. The monetisation strategies vary as much as the content, and so far it seems the market is accommodating all approaches.

Netflix reported US streaming revenues of $2.19 billion for 2012, with moderate growth from quarter to quarter. US DVD revenues totalled $1.14 billion and declined each quarter during this period, highlighting the company’s transition from a packaged-goods model to a streaming business. Paid streaming revenues worldwide also increased, reflecting Netflix’s expansion into Europe, Latin America and the Caribbean.

With hundreds of millions of ad dollars flowing to streaming services, marketers see new opportunities to connect with US customers on digital platforms. Hulu’s published revenue figures for 2012 indicate that the service is making more money from ads than from subscription fees, and network web sites, sports sites and other channels are also capturing ad revenues from the growing streaming audience in the US. Even content that resides behind pay walls can be monetised with ads. As the streaming market continues to grow, so will the potential for advertisers to tap into it.



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