New Study: Streaming Services Rapidly Replacing Traditional TV

84% of U.S. study participants have replaced traditional TV with
streaming services, 62% assert traditional TV is irrelevant

SAN FRANCISCO–(BUSINESS WIRE)–According to Statista, a leading provider of market and consumer data,
in 2018 the
global number of streaming service users was more than 1.02 billion
people, and is expected to reach 1.24 billion by 2023. Findings from
a new Simon-Kucher study* validate this trend, revealing that 84 percent
of U.S. participants (with a high affinity for streaming) have already
replaced traditional TV with streaming services, with 62 percent stating
that traditional TV has become irrelevant. “Growing numbers of viewers
have turned their backs on linear television,” according to Lisa
Jaeger, media expert and partner at Simon-Kucher.
“They increasingly prefer ad-free video streaming services, a trend that
will impact TV advertising on a grand scale.”

Streaming provider success criteria: High-quality content, no ads

In the U.S. the study found the top criteria for subscribing to a
streaming service is the availability of a broad range of high-quality
content, followed by price. Content exclusivity, which is often
communicated by providers as a unique selling proposition, was listed as
being least important. “These insights give providers some leeway when
it comes to pricing,” explains Simon-Kucher partner Eddie
Hartman, a revenue growth and go-to-market strategy expert.
“Provided they offer attractive content and remain ad free, they can ask
customers to pay a modest premium.” The study results also indicate
nearly 40 percent of U.S. participants prefer paying a higher monthly
charge in exchange for having no commercial interruptions to their
viewing experience. Thirty-four percent indicated a willingness to
accept a small number of advertisements in exchange for a lower monthly
charge, and only seven percent would prefer a payment model with a
greater amount of advertising and no fees.

How will new market entrants change the competitive landscape?

Because price isn’t the primary consideration when choosing a streaming
provider, low-priced offerings like Disney’s recently announced $6.99 US
per month streaming service Disney+ aren’t expected to disrupt the
market. Additionally, the Simon-Kucher study revealed that potential
users already find the Apple TV+ offering to be attractive, with 31
percent of US respondents stating they would definitely subscribe to it,
56 percent stating they would consider subscribing to it, and only 13
percent expressing no interest in it. Their willingness to pay aligns
with general market pricing levels, with $10 US per month considered
fair in comparison to Netflix’s basic plan at approximately nine dollars
US, and Hulu’s ad-free option at $12 US.

However, it appears unlikely that Apple will drive established
competitors out of the market, with 41 percent of US study participants
stating they would use Apple TV+ in addition to existing subscriptions,
while another 41 percent would use Apple TV+ and probably cancel at
least one existing subscription. No respondents stated an intent to use
the Apple service exclusively and cancel all existing subscriptions.
“These findings are actually good news for the entire industry, with
streaming providers having the chance to co-exist. But to set themselves
apart from competitors, they will need to commit to providing content
that is attractive to consumers,” says Jaeger. “This will be especially
important when Disney+ enters the market. Although its offering will
probably appeal to a different customer segment, the possibility for
predatory competition with a lower-cost provider like Netflix still
exists.”

*About the study: The study “Relevance and future usage of
Apple TV+” was conducted by Simon-Kucher & Partners in March and April
2019 in nine countries (Australia, Brazil, Chile, France, Germany,
Mexico, Singapore, UK, US). In total 490 persons with a high affinity
towards video streaming were asked about their current and future TV
habits. All participants either have a streaming subscription or are
considering acquiring one in the future. In the US, 59 persons
participated. The study is available on request.

Simon-Kucher & Partners, strategy & marketing consultants: Simon-Kucher
& Partners is a global consulting firm specializing in TopLine Power^®
with a focus on strategy, marketing, pricing, and sales. We help our
clients achieve growth and profit targets by applying practical,
evidence-based strategies. Simon-Kucher & Partners is regarded as the
world’s leading pricing advisor and thought leader. The firm has
1,300 employees in 38 offices worldwide.

Contacts

Douglas Jensen (Public Relations)
Tel.: 617-231-4556
Email: douglas.jensen@simon-kucher.com
www.simon-kucher.com