Industry insights: FAST gains yet more ground in the US, Netflix’s crack down on password sharing could yield billions when it reaches the same country, and HBO Max and Discovery+ merger plans confirmed.
FASTer than ever: FAST takes off at increasing speed in US
Currently, 69% of TV content viewers in the US use free streaming services at least once a month, a sharp increase from 42% in 2019, according to Horowitz Research, with Peacock, Tubi, Pluto, and YouTube heading the lists.
The data comes from Horowitz’s State of Media, Entertainment & Tech: Subscriptions 2023 study and there’s some interesting analysis elsewhere in the report looking at perceived value. As the average spending on SVOD services per household has edged up to over $50 per month, the number of cord-cutters reckoning that that $50 cost represents good value is dropping. In 2019 just over half of cord-cutters felt they were saving “a really good amount” every month, with that number dropping to 33% today.
Perhaps as a result, after years of decline in Multichannel Video Programming Distributor (MVPD) subscriptions, penetration of traditional cable/satellite services seems to be remaining steady at last. 52% of TV content viewers currently subscribe to MVPD services, and customer satisfaction with their service overall among those subscribers is impressively high, running at 80%.
And interestingly, 32% of cord-cutters say that if the cost of all their streaming services continues to increase, they might consider going back to cable. ‘Cord-rejoiners’ might yet be the trend that no-one saw coming.
Password sharing crackdown forecast to spur growth for Netflix
Some interesting new analysis from Macquarie Research reckons that Netflix’s imminent password sharing crackdown in the US market might well serve as an important catalyst for growth on its ad-supported tier.
As Fierce Video reports, Macquarie looked at three scenarios based on how 30 million existing but unmonetized users might do to retain their account when Netflix implements password sharing charges in the US. This is not a fanciful number either; last year the streamer estimated that 100 million people globally were using the service for free via credential sharing, with 30 million of those located in the US and Canada.
While Canada has already had the paid sharing roll out, the US is one of the next territories in line for the initiative. So, how might it play out? At an assumed price of $7.99 per month per user, Macquarie estimates the strategy could net annual incremental revenues between $1.17 billion and $3.5 billion. These are big numbers even at the low end of the scale (which, incidentally, Macquarie reckons is the most likely outcome) and they include revenue from both the add-on charge for extra accounts as well as revenue estimates from the ad tier as the firm anticipates the monetization of password sharing to boost adoption of the AVOD plan.
It’s also worth pointing out that the estimates are for the full-year 2024, since Macquarie anticipates that the paid sharing strategy will likely lead to higher churn at the start of the initiative.
“All scenarios point to a higher incremental revenue to the existing ad-free revenue forecast, with a significant upside potential. Since the ad tier roll out has been quieter than expected, we think the implementation of the paid sharing strategy would lure more users to the ad tier and attract a wide swath of advertisers as the user base expands,” wrote Macquarie analyst Tim Nollen in a research note. “We see this crackdown on password sharing as a catalyst to the growth of its ad tier roll-out.”
To the Max: Warner Bros. Discovery unveils new service
We’ve known that the HBO Max and Discovery+ streaming services were going to be combined into one single service since last summer, not long after the merger between WarnerMedia and Discovery was eventually finalised. Back then, it was forecast to be a year away, but it seems that the timeframe has been accelerated with the reveal of the new name, simply ‘Max’, and a corresponding launch date of May 23.
There are going to be three tiers: The $19.99 per month ad-free Ultimate tier comes with 4K HDR Dolby Atmos for some content, 100 offline downloads, and four concurrent streams. Below that sits the $15.99 per month standard ad-free plan, offering HD quality, two concurrent streams, and 30 offline downloads. Meanwhile, the $9.99 monthly AVOD tier offers HD quality and two concurrent streams. That is the lowest price available currently; rumours of a totally free AVOD product proving to be wide of the mark for now at least.
The way that the two services are being merged will see HBO Max users automatically and seamlessly switched to the new app at launch. Discovery Plus will remain a standalone option that retains the current $4.99 per month price with ads or $6.99 per month without.
A new interface, including a new content navigation system, personalized recommendations, and a shortcut to save content to watch later lists, is also promised.
Ambitions are high too. The combined services currently have just over 96 million subscribers and the hope is to grow this by some 35% to 130 million by the end of 2025.
