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Consumers Go to Streaming Before Pay TV: Hub Research

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Since 2015, Hub’s annual "Decoding the Default" study has tracked the TV source that consumers consider their TV home base: the source they turn on first when they’re ready to watch. This year’s study identifies viewers’ “home base” and the considerations that drive their choice of default. 

Hub's Jon Giegengack will discuss some of these findings during the panel "Lessons Learned from the COVID-19 Crisis" at Streaming Media West Connect.

Highlights from the study:

1) Online TV sources—including streaming on-demand services like Netflix, free services like Pluto TV, and Virtual MVPDs like YouTube TV—are now the TV go-to for half of all TV consumers.

  • 50% say an online service is the first source they turn on, up from 47% last year.
  • 42% say their first choice is viewing from the traditional TV set-top box (live viewing, DVR, or Video on Demand), down from 47%.
  • Note: the remaining percentages each year default to viewing over-the-air, from an antenna.
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2) For those who default to an online source, nearly half (23% of the 50%) say that online source is Netflix. In fact, Netflix, by itself, is now nearly as likely to be consumers’ TV home base as all live TV channels accessed through pay TV combined.

  • Back in 2016, live TV from a pay TV service was three times as likely as Netflix to be viewers’ TV default.
  • Today, Netflix trails live viewing by only 7 percentage points.
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3) Fewer than 1 in 5 young consumers default to live TV, down 7 points from last year. But more ominously, even among live TV’s strongest adherents—those age 55 or older—the proportion defaulting to live has dropped significantly since just last year.

  • Only 14% of 18-34 year olds turn to live TV before any other source, vs. 21% in 2019.
  • We see an equal 7-point drop among 55+ year olds; fewer than half now say live TV is their viewing home base.
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4) The choice of default is driven primarily by two factors: content and ease of show discovery.

  • The top reason for making a source one’s default is because it offers access to one’s favorite shows. But a more general content consideration is a top driver as well: wide variety of shows and movies to choose from.
  • Interface simplicity is also a top driver of default: in particular, the service makes it easy to find something to watch.
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5) Why the default service matters: when consumers decide it’s time to cut back on TV services, they’re much more likely to remain loyal to their TV service default.

  • We asked consumers to tell us which one TV service they’d keep if they had to drop all others.
    • Among users of each, pay TV service and Netflix were the two most likely to make the cut.
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  • However, among users of each service who also treat it as their default, the proportions saying they’d hang on to the service to the bitter end are much higher.
    • For subscribers to the Big 4 SVODs (Netflix, Amazon, Hulu, and Disney+), loyalty to the service is 2 to 4 times higher among those who default to the service vs. users of each service overall.

"We've seen a significant boost in streaming TV service subscriptions since the start of the pandemic in March of this year," said Peter Fondulas, principal at Hub and co-author of the study. "But perhaps more significant than the simple increase in online subscriptions is the profound shift in consumers’ viewing behaviors generally. Instead of reaching first for the cable remote when it comes time to watch TV, more and more consumers are defining TV viewing, first and foremost, as viewing on streaming services. Whether that shift persists once the pandemic crisis has passed is, of course, the billion-dollar question."

The data cited here come from Hub’s "Decoding the Default" study, conducted among 1,600 U.S. consumers with broadband, age 16-74, who watch at least 1 hour of TV per week. The data was collected in August 2020.

Hub Entertainment Research tracks how consumers discover, choose, and consume entertainment in today's rapidly changing media environment. Hub works for leading technology companies, content creators and distributors to assess the present and forecast the future. To learn more, visit us at Hub.

[Editor's note: This is a lightly edited press release.]

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