Originally featured by: The Digital Entertainment Group
November has been a busy month in the world of streaming services. The numbers around last week’s Disney+ launch were strong – so we took a look at what drove its initial success. Based on the latest NPD Device Ownership Trends & Profile report, consumers reported strong interest in the service with 28% saying they were extremely, very or somewhat likely to subscribe within the first year. But the data tells a more insightful story; one about viewers new to Direct-to-Consumer (DTC) video whose interests expand far beyond family programming. Here’s what we learned:
Half of the Disney+ audience is new to DTC video. As a point of reference, DTC video streaming has already surpassed an early adopter audience, with 20% of U.S. internet households subscribing directly to at least one network channel. However, while half of Disney+ subscriber interest is being generated by households that already have a DTC video subscription, for the other half, this is their foray into streaming network programming directly from the distributor. This is of tantamount importance because most DTC subscribers have communicated a zero sum game when it comes to their entertainment spend. Research shows that 73% of those planning to subscribe to additional DTC video channels intend to cut or reduce other entertainment spending to do so. It’s an audience focused on affordability and subscribing to only the specific content they want to watch. This suggests Disney+ subscribers are satisfied with the price to value ratio of the content array and as such directed their spending to the service.
It’s not just about family programming. Half (51%) of likely subscribers don’t have children under the age of 18 living in their home. This demonstrates interest that expands well beyond family programing. Indeed, half (51%) of the audience don’t even have a household member that watches a family network. Further, an overwhelming majority (76%) of these households don’t watch the Disney channel. These points dispel the myth that Disney+ is just for those that watch cartoons. They are also a testament to a launch strategy that leveraged a broad range of available programming beyond Disney such as Pixar, Marvel, Star Wars, National Geographic, The Simpsons, 21st Century FOX classics and never-before-seen original feature films and series. Finally, it suggests the upcoming HBO Max programming launch strategy is on point with consumer interests as it too is geared at a broad demo target.
Low cost of entry. Reaching a new DTC video audience and promotions such as Verizon’s Disney+ on Us facilitated success. But for other consumers, they simply do the math and determine the price is right for the programming they want. For example, someone planning to watch the Marvel movie series will cover most if not all of the $69.99 annual subscription by simply saving on film rentals. While these kind of consumer trade-offs may benefit the Disney brand, these shifts in consumption patterns have the potential to impact the transactional video business.
Availability on the right devices. Price, promotion and content need to be facilitated by reach to the right audience, in this case one focused on using TV-connected devices to stream video. To that end, Disney+ launched with availability on the top five (based on household reach) connected device platforms, Samsung TV, Roku, Fire TV, PS4 and Xbox One. That is thanks to a last minute deal with Amazon, where the service was made available on Fire TV. Otherwise the #3 TV-connected device streaming platform would’ve been missing and have left potential viewers on the outside looking in.
This launch marks a turning point where the mass market is discovering streaming video expands far beyond incumbents such as Netflix. Understanding the Disney+ launch drivers are critical as it is merely a precursor to the upcoming year when HBO Max, Peacock and Quibi come to market with competitive streaming offerings.
OTT.X Summit Market and Conference 2020
Presentation Title: Quantifying the Content Rollercoaster of 2020: Macro Viewership Trends Across the VODs (AVOD, SVOD & TVOD)
Presenter: John Buffone, Executive Director, Industry Analyst, The NPD Group
Date & Time: September 1, 2:45PM Eastern
Description: The backdrop… Before COVID-19 upended 2020, it was already shaping up to be among the most dynamic years in home entertainment as the major media conglomerates launched direct-to-consumer streaming services. This primed environment was then catapulted by the stay-at-home orders that propelled a massive increase in home entertainment engagement. As with any roller coaster the recovery phases generated shifts in viewing habits, ones that will impact home entertainment marketing and distribution strategies well into 2021. In a fast hitting, 15-minute session, we’ll summarize the key trends that matter for operating successfully across The VODs in an environment that none of us have seen before.