Analysis: 10% decline in US AVoD user base

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While pay-TV is largely stable, and SVoD continues to grow, OMDIA’S latest consumer survey (April 2021) suggests that a significant number of users are eschewing AVoD and instead increasingly consuming content via paid alternatives.

The launch of Studio AVoD service will draw viewers away from BVoD, reducing the overall number of services that a consumer must manage, while maintaining access to the same volume of content.

Delivering a keynote address – Aggregating OTT apps: The window of opportunity for Pay TV – at Connected TV Summit 2021, OMDIA Senior Research Director Maria Rua Aguete told  delegates that after the 2020 explosion of VoD growth, OMDIA was seeing a cooling of the market, partially driven by viewing habits normalising, and industry consolidation, but also from a wealth of new SVoD and studio services.

As the number of users of AVoD declines, the average number of US video services (SVoD and AVoD) taken per VoD user has also fallen for the first time, from 7.23 in November 2020 to 7.06 in April 2021.

Outside of the US, the other countries surveyed showed the number of online services per home continuing to rise, with the UK reaching 5.78 services per user. In the past, many have posited an ultimate limit to the number of services a consumer will be able to manage; with US growth stumbling, many will be asking if 7 is the new ceiling for video streaming video services (Pay and Free)?

Among Rua Aguete’s observations:

  • The first-generation of BVoD services have been one of the ‘victims’ of cord-cutting. From the early days of online catch-up services, US pay-TV operators have exercised their carriage fee bargaining power to demand that broadcaster catch-up services limit the seven day catch-up window to authenticated pay-TV users. As a result, in the US broadcaster catch-up became synonymous with TV Everywhere (TVE) – with most of catch-up viewing happening in those first seven days after broadcast, the viewership of catch-up on network sites (e.g., abc.com) and apps (e.g., NBC app on iOS devices or Smart TV) was effectively limited to TVE users.
  • This presented an interesting conundrum to broadcasters – cord-cutting was not only leading to their linear TV network decline but was also threatening their online viewership. As a result all major US TV broadcasters have made a move into next generation of AVoD, either acquiring a next-generation service or developing a service in-house. 2019-2020 saw:
    • Disney fully integrating Hulu
    • Viacom CBS acquiring Pluto TV and relaunching CBS All Access as Paramount+
    • Fox acquiring Tubi
    • NBC launching Peacock
  • These acquisitions/launches came with a strategic reallocation of production, marketing and other organisation resources towards these new D2C services, often at the expense of broadcast networks and cable channels, let alone first-generation BVoD/TVE services.
  • As a result in early 2021 OMDIA is seeing accelerated decline of first-generation BVoD/TVE services – first off, they’ve lost eligible users as a result of cord-cutting, secondly they’ve lost viewership to new generation of AVoD platforms that broadcasters are now prioritising.
  • Lastly, OMDIA is starting to see the anticipated streaming services fatigue in the US, but critically it’s not an SVoD fatigue. “OMDIA has long anticipated that consumers will become more sophisticated about their self-bundle and composition of the streaming services bundle they consume on a monthly basis will be more ‘seasonal’, with consumers tracking particular content they want to watch and dipping in and out of services based on that. Dipping in and out of AVoD services is even easier than dipping in and out of SVoD and we are starting to see this behaviour,” advises Rua Aguete.

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