As the world and our industry enter the heart of the COVID-19 crisis, there are several factors applying pressure on or support to different parts of the ecosystem.
The surge of consumers connecting from home for work and school peaked between March 14-16, driving large numbers of new broadband additions which resulted in spiked interest for SVOD/OTT video services as well as some new traditional linear video subscriptions. As markets settle into shelter-in-place orders, we are already seeing the trailing off of activity. This sudden growth in March and early April will be followed by a need to protect subscribers as time goes on and economic stress hits many.
Currently, consumers put more trust in the private sector to get things done more so than the government. Companies that meet the needs of telecommuting, online learning and home entertainment will thrive. Removing broadband caps, bumping speeds for low-income qualified broadband service, offering vetted educational resources for parents and children have been well received by consumers and the press. Network reliability and stability will be crucial in the coming weeks to maintain this sentiment, more so than even overall network speeds. Finding the right marketing and communications voice in all of this will also be crucial.
In the coming weeks, MVPDs should expect to see a trailing off of the current spike in new subscribers and adjust to a period of protecting their subscriber base. Upwards of 30% of households may see job reductions or losses that stress them economically. This will likely hit linear video and other video subscriptions harder than broadband, as broadband is now the essential connector for working, schooling, and home entertainment. MVPDs may consider accelerating plans to offer smaller TV packages as a retention play to keep a TV subscription in the home, which has been shown to protect the higher margin broadband service. There will likely be a slowing of competitive switching during this time as well – the wireless industry reports a 30% drop in number porting in just the last few weeks.
MVPDs will be fighting to win the consumers moving in markets where shelter-in-place orders have been issued. Movers make up half of all TV and broadband connects. There will be fewer moves in these markets, but historically low interest rates and a fast-evolving model for showing and selling homes virtually, may keep the move rates higher than initially feared.
Content providers will likely be faced with the mixed effects on linear subscriptions. The recent growth in TV connects seen by some MVPDs runs into the existing shift toward new TV models that will likely be accelerated by under or unemployed consumers no longer able to afford larger TV bundles. While a few may leave the TV ecosystem, many will shift to other video services and revenue streams such as DTC offerings or smaller bundled TV packages offered by vMVPDs and non-linear OTT/SVOD providers.
In terms of habits, going to the movies, watching live sports or socializing with friends has been replaced with watching live TV, particularly cable news, children’s programming, watching movies, texting, social media, and even reading and listening to music. The platforms seeing the largest boost in viewership are Disney+, movie rentals, Hulu, Netflix, and playing console video games.
As consumer lives continue to be affected by the pandemic, so will the changes to our industry. Much will change in the coming weeks. During this time, CTAM’s online resource center will host the top of the trends in consumer sentiment and behavior from primary research, macroeconomic and industry data, and the effects we see happening in other industries.
Acknowledgement: member research partners HarrisX, Horowitz, HUB, Magid, and ShareTracker all graciously provided COVID-focused research findings on consumer sentiment and behavior to CTAM and its members, which greatly contributed to this summary.