While the overall penetration of US streaming households has climbed during a COVID-19 pandemic that has forced millions to shelter at home, Netflix has maintained its overall dominance of the competitive subscription VoD market while relative newcomers, including Disney+ and Apple TV+, have struggled to boost daily usage.

That's among the main takeaways from a new SVoD study from MoffettNathanson developed with HarrisX based on data from 19,416 US respondents collected between January and March 2020.

Per that study, overall streaming penetration in the US reached 74% in Q1 2020, implying healthy subscriber growth during the quarter.

Figure 1:

Among individual services, Netflix held its ground with a 72% share among streaming households, retaining its position as the dominant player in the SVoD market. That's about 1.4 times the penetration of its nearest rival, Amazon Prime Video, the study found.

MoffettNathanson expects Netflix to turn in a big Q1 next Tuesday (April 21) and post US paid sub adds of 1.75 million (versus earlier expectations of 500,000) and 8.5 million internationally (compared to a previous estimate of 7.1 million). For all of 2020, the research firm now expects Netflix to add 28.9 million paid subs overall, 16% higher than a prior estimate of 25 million.

Disney+, which just crossed 50 million subs worldwide, held a 27% share in US streaming households in March, but also saw a big drop in consumers who use the service on a daily basis – going from 41% in Q4 2019 to 31% in Q1 2020. The study estimates that about 19% of Disney+ users come from the Verizon promotion (a free year to customers on mobile plans and new customers to 5G Home and Fios Internet).

The drop in daily usage on Disney+ "may signify the need for more original content," Michael Nathanson, an analyst with MoffettNathanson, explained. He noted that the service is currently best designed for families and children and not yet optimized for older consumers seeking daily or weekly content. While Disney+ bolted from the blocks with The Mandalorian, an original series set in the Star Wars universe, the COVID-19-induced shutdown will delay Disney+'s ability to ramp up more original content in the short-term, the analyst added.

Apple TV+, introduced last November, is creeping along, and only being watched in 7% of streaming homes, with about half of the service's base coming from promotions, the study found. That dismal result "speaks to its limited content offering and lack of library," Nathanson wrote. "Apple should be worried about future subscriber churn given the mix of a large number of promotional customers on one-year plans and a lack of original content."

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Apple TV+ and Disney+ "are still not inflicting any damage on the streaming market hegemony," Nathanson wrote. "Rather, they are growing the overall pie, at least in the initial phase of this COVID-19 environment."

Like Netflix, Disney-owned Hulu and Amazon Prime Video have held strong in the SVoD battle. Among nuggets from the study, just 4% of Amazon Prime Video subs take the $8.99 video-only plan. Some 69% of Hulu subs take the SVoD service's ad-supported basic tier, but only 3% of Hulu SVoD subs get the $12.99 bundle with Disney+ and ESPN+.

While all of those major SVoD services have benefited from the rise in streaming household penetration, the study points out that a major area of growth appears to be emanating from the "long tail of other services." That group includes a mix of subscription-based and free, ad-supported services, including CBS All Access, Pluto TV and Tubi.

Questions about newcomers
And what of the new, general entertainment SVoD services that are nearing their nationwide debuts? "Currently, there seems to be limited consumer interest in subscribing to Peacock or HBO Max," Nathanson said. "We will have to wait and see if streamers start to drop their Netflix subscriptions as Disney+ attracts new users and new entrants (i.e., HBO Max, Peacock, Quibi) make for an increasingly crowded streaming marketplace. So far, the new bundles have been complements, not substitutes."

Pay-TV impact
The study also took a look at how the SVoDs are impacting and replacing pay-TV services. About half of streamers subscribing to Netflix, Amazon Prime Video, Hulu and Disney+ who have cut out pay-TV cited overall costs or perceived lack of value as the primary factor. The second most reported reason for cutting the pay-TV cord was content availability. A smaller group said they gravitated to SVoDs and sidestepped pay-TV to avoid watching commercials.

Nathanson said those findings indicate that both virtual multichannel video programming distributors (vMVPDs) and traditional MVPDs will be materially impacted by ongoing price hikes and "likely push even more people towards OTT offerings."

Light Reading wil tackle this subject next week with a free online event focused on next-gen video streaming that was originally set to run during NAB 2020. That 90-minute virtual event, "Taking Streaming Video the Next Level," is set to start at 11:00 a.m. ET on Monday, April 20. Registration is free.

Execs on tap to speak at Monday's virtual event include Jason Thibeault, executive director of the Streaming Video Alliance; Steve Nason, director of research at Parks Associates; Rob Holmes, vice president of programming at Roku; Mitch Weinraub, industry vet and former exec with Sling TV and Dish Network; Jim DeChant, vice president of technology at News-Press & Gazette Broadcasting; and Rob Wilmoth, chief architect at Red Hat. Alan Breznick, cable/video practice leader at Light Reading, will host.

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— Jeff Baumgartner, Senior Editor, Light Reading