Advanced Television

Research: Online increasingly favoured TV source

September 20, 2022

Since 2015, Hub Entertainment Research’s annual Decoding the Default study has tracked the TV source that consumers turn on first when they’re ready to watch.

Highlights from the study:
1) Across the entire TV viewer base, live TV from a traditional pay-TV service remains the most common first stop for viewing.

  • 28 per cent say that linear channels from a cable, satellite, or telco TV subscription is their TV home base.
  • Netflix is a close second, at 23 per cent, while no other individual source reaches double digits.

2) However, live TV has been dropping steadily as a default source over the past seven years and is at its lowest point since we began measuring default sources.

  • Netflix reached a saturation point as a default in 2018 (23 per cent) and has been fluctuating around that level ever since.
  • On the other hand, the other ‘Big 5’ streaming subscription services have made more consistent gains. While no single service in this group comes close to Netflix, in combination, they’re now just 7 points behind.

3) The declines in linear from traditional pay are not helped when one adds in linear from Virtual MVPDs.

  • If anything, adding in live from VMVPD shows an even more pronounced decline for live TV in general as the first stop for TV. The percent turning first to VMVPD has not risen above 6 per cent since we started measuring defaults.
  • Overall, the percent defaulting to any live TV subscription is only 32 per cent in 2022, 3 points lower than in 2021 and 7 points lower than in 2019.

4) Choice of default is dramatically different by age.

  • Among 18–34-year-olds, 38 per cent make Netflix their first viewing choice—more than three times the proportion who default to a traditional live source.
  • On the other hand, half (50 per cent) of 55+ year-olds turn first to pay TV linear channels, more than five times the percent who make Netflix their first viewing stop.

5) Although live from traditional TV still hangs on to a slim lead as the top individual default source, online sources in general dominate traditional pay TV sources in general.

  • And that dominance has increased since even last year: 57 per cent make an online source their TV home (up from 55 per cent) last year, while 38 per cent default to a source from a pay-TV set-top box: live, DVR, or VoD (down from 39 per cent).

6) Hub also sees interesting trends by age for each of the sources it measures.

  • The small proportion of 18–34-year-olds, and the large proportion of 55+ year olds, who default to some live source hasn’t changed since last year. But 35–54-year-olds are now 7 points less likely to default to live.
  • The proportion defaulting to Netflix has not changed among 35-54 or 55+ year olds. But after dipping between 2020 and 2021, Netflix is up 7 points as a default among 18–34-year-olds.
  • The drop that Hub just observed for live among 35–54-year-olds comes with an increase of 4 points defaulting to a Big 5 SVoD other than Netflix among this age group.

7) Why is being a default service so important? Those who default to a service are dramatically more likely to remain loyal to it.

  • Hub asked consumers to tell the company which of the TV services they currently have they would keep if they had to drop all services except one. Among all subscribers to traditional pay TV service or each of the Big 5 SVoDs, anywhere from 8 per cent to 37 per cent name each as the service they’d hang on to if they had to drop all others.
  • But among those who default to each of those services, the percent saying it would be the one service they’d keep jumps dramatically, to anywhere from 59 per cent to 65 per cent.

“At a time when the typical TV consumer uses an average of 7.4 different sources of TV content (Hub, The Best Bundle, 2022), simple penetration of a service in the marketplace is no longer a reliable measure of long-term service success,” advises Peter Fondulas, Principal at Hub and co-author of the report. “A much better predictor is how much consumers engage with each service they have—and in particular, which they consider their TV viewing home base.”

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