nScreenMedia OTT multiscreen media analysis

Three major television consumption trends for 2020

SVOD US home penetration 2014-2019

As traditional TV programmers jump into the online television market, changes in television viewing habits will accelerate this year. Here are three major 2020 television consumption trends that will make headlines in the coming months.

Pay-TV business model continues to unwind

The days of everyone having or wanting to have a linear pay-TV subscription are fading fast. Here are three major trends that will accelerate in 2020.

Subscription cost increases continue

Both MVPD and vMVPD operators will continue to increase the cost of subscription ahead of inflation. Sling TV increased prices for its entry-level plans by $5 a month (a 20% increase) at the end of 2019. Charter, Comcast and others are raising rates too.

Programmer demands for over-inflation increases in licensing fees for their channels are driving the rate increases. Since major TV providers are now fully invested in online delivery, they have no reason to moderate their demands. Similarly, traditional operators are fully prepared to let customers go that are not prepared to pay the price increases, and vMVPDs can’t afford to absorb the increases. The above inflation pay-TV subscription increases will continue in 2020.

Cable, satellite, and telco TV subscription decline accelerates

Increasing prices and the availability of premium TV content through SVOD services online will cause the number of people deciding to live without their cable, satellite, or telco TV subscription. 2019 saw a decline of more than five million. Expect to see six to seven million more join them this year.

pay tv home forecast to Q3 2020

vMVPD growth does not compensate for traditional losses

Last year, MoffettNathanson estimated that 40% of people leaving traditional pay TV subscribed to a vMVPD service like Sling TV or Hulu Live. Watch for that conversion rate – from MVPD to vMVPD – to fall in 2020. As well, many savvy consumers will become service spinners. They will subscribe to a vMVPD service for a month or two when there is something they want to watch – like this summer’s Tokyo Olympics. Then they will cancel it again afterward.

Free ad-supported online TV accelerated growth

The opportunity for free ad-supported online TV has opened dramatically over the last year. Market leaders Pluto TV and Tubi both claim 20+ million monthly access users (MAUs.) They also say they can reach audiences that eschew traditional television, like younger viewers.

Viacom recognized the opportunity last year and bought Pluto TV. Now that Viacom and CBS are one and Viacom head Bob Bakish is the new ViacomCBS leader, expect the company to put much effort toward growing Pluto’s business. Comcast is in talks to acquire another ad-supported provider, Xumo. Expect the deal to complete and for Xumo to become part of NBCU, where it will find keen support to grow its business.[i]

SVOD penetration and stacking growth increases

In the last year or so, the rate of growth in the penetration of SVOD services has slowed somewhat in the U.S. According to Leichtman Research, 74% of U.S. homes had at least one SVOD service in the first half of 2019, up from 69% in 2018 and 64% in 2017.  Expect growth to spike higher in 2020. The marketing blitz for Disney+ is sure to have captured many consumers that have so far been reluctant to move online. More will come when HBO Max launches. In 2020, penetration will exceed pay TV penetration and grow a further 5%, to reach almost 80% of homes.

As well, the number of people with multiple SVOD services – so-called service stackers – will also increase sharply. There was a flurry of data in 2019 saying that many consumers will cancel an existing SVOD service to take one of the new ones. However, few will follow through on their intentions in 2020. Instead, they will spend more time watching online making it more likely that they will cancel their cable subscription.

The three significant trends discussed so far will have knock-on effects accelerating other tendencies established over the last year or so. For example, connected TV adoption, online video ad-growth, and mobile viewing all will grow strongly in 2020.

[i] Should the Comcast deal fall through, expect another broadcaster or online provider like Amazon to step in quickly.


One Comment

  1. Interesting to do some simple stats on these results. Almost like clockwork the blue (any SVOD service) is going up by 5% YOY almost every year for the 5 years reported (except one when it was 7%). This is amazingly linear. I project an asymptote in the US by 2024 then let the battle begin in a new phase.

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