Summer Not Loving for SVOD

It’s been an eventful second half to what has been a great year of television.  Broadcast TV, against the backdrop of new competitors and often hyperbolic screeching of its demise, we have seen a plethora of big hitting, ratings winners. I will come back to that particular topic in another post however. Today I would just like to turn our attention back towards SVOD (what? Again?!).

At the beginning of this year, SVOD was continuing its meteoric rise. In fact, across Q1 we saw the strongest SVOD subscriber growth measured by BARB.  So much so, I even predicted that I expect total SVOD subscriber penetration to break 50% of all households by the end of this year.

However, following that strong Q1 growth, we have witness two subsequent slower growth periods, culminating in Q3 figures that shows the slowest growth ever recorded by BARB.

SVOD Numbers

Across the entire three months, SVOD services added less than 50k households to their subscriber services, with all three main players experiencing flat returns on the quarter.

Now, it’s fair to say that the third quarter of any year is not exactly a boon time for growth, it is the summer after all, and TV viewing historically is impacted severely during the summer months and in hot weather.  So, in part, it is not surprising that after a long hot summer, this had a knock on effect on SVOD take up, as well as traditional TV viewership.

WeatherModel

It is of course unclear as to whether this slowdown in growth is temporary or a potential plateau in the scale of these services, and eyes will be on Q4 data when it is released by BARB in early 2019.  Until then we can just hypothesise.

What we do know of course is that the role of SVOD is already mainstream, and whether a plateau or not, with 41% of all UK households subscribing to a service, their influence on TV continues to be significant. 

So much is the impact of SVOD, that at a recent Royal Television Society evening, Justin Sampson, CEO BARB, highlighted that the amount of viewing on the TV set that is ‘unidentified’, and therefore to content that does not relate to a broadcast programme, has increased by 58% since 2015.

This equates to 19% of all TV set viewing.  Now, what is not clear, by definition of being ‘unidentified’, is that we dont know how much of this is SVOD, but the trend is clear. Justin Sampson even went further, with flagging that for 16-34s, the ‘unidentified’ component equates to 38% of all their TV set viewing.  

Not surprisingly, Justin announced that identifying this content was of utmost priority for BARB in the coming months and years, with investments and tests with both Nielsen and Kantar Media technologies.

Nielsen themselves announced at the recent ASI TV & Video conference that they are now regularly reporting SVOD viewing figures at a programme level to subscribers in the US, with some fascinating results. Unsurprisingly, there were large viewing levels to the big promoted shows across Netflix, Amazon etc, but of increasing interest was the value that archive, low-cost comedy series provide in viewership levels. Friends for example across the year providing as much minutage of viewing as some of the high budget commissions. Although at first surprising, you can see, even from data in the UK, why Netflix first went for the show, it still drives constant audiences to Comedy Central, getting a reach over the year in excess of 15m. Being able to look at this non-linear SVOD viewing as well however provides event more context. With this extra data, existing within a single source data sets, subscribers will not only be able to see whether SVOD viewing is cannibalising their broadcast, but additionally it will allow their programme sales teams to potentially re-evaluate the true value of their programmes, many years after their initial broadcast rights cycle. Netflix in particular already spend multiple billions on programme acquisitions, should this sort of data become increasingly available, it may be that traditional studios begin demanding a fairer share for their content?  We can see this with Friends itself, quite possibly off the back of the data provided by Nielsen, with Netflix having to increase its rights offer by $70m to a whopping $100m, up from its current $30m.

Q4 promises to be a crucial few months in the growing position of SVOD in the UK TV Landscape, all eyes will be on BARB in early 2019.