US pay-TV providers fight back with new SVOD launches

October 2, 2020

Greg Sigel

VP – Partnerships

Traditional pay-TV providers are fighting back in the war for audience share with streaming providers like Netflix, Amazon Prime and HBO Max by launching their own subscription video on demand (SVOD) services in the US and further afield.

Paramount+ will be the new name of ViacomCBS’ existing CBS All Access video on demand (VOD) and live streaming service. It’s initially set to deliver a library of broadcast, news, sports and entertainment content to subscribers in the US before extending its reach into Australia, Latin America and the Nordics in early 2021 (further rollouts in other geographies may follow at a future date). Pricing for Paramount+ has yet to be announced, but in the US CBS All Access costs US$6 a month while ViacomCBS’ parallel Showtime streaming service (which includes Showtime, The Movie Channel and Flix) comes in at US$11 a month.

ViacomCBS has been gradually moving deeper into digital streaming over the last few years. That strategy rapidly accelerated following the reunification of separate entities Viacom and CBS in an all stock merger transaction at the end of 2019 (both companies are owned by the Redstone family and were formerly one unit before being split up in 2006). Since that time CBS All Access has seen significant growth in both its content library and user base – its latest financial report suggests that the number of domestic US streaming subscribers increased 75% to 16m.

In the quarter ending June 2020, the company’s domestic streaming and digital video revenue combined grew 25% year on year to US$489m, driven by a 52% growth in streaming and subscription turnover. That was boosted by a multiplatform partnership with US telco Verizon spanning the latter’s pay-TV, broadband and mobile distribution channels.

Even before the merger, the various business groups that now makeup ViacomCBS had already taken measures to upgrade and expand their propositions beyond pay-TV and linear TV to compete with streaming SVOD services from the likes of Netflix, Amazon Prime Video, HBO Max, Disney+, Hulu and others. Viacom acquired Internet focussed film, and television studio AwesomenessTV in 2018 followed ad-supported streaming platform Pluto TV for US$340m in January 2019. It also launched the BET Plus streaming service as a joint venture with Tyler Perry, later adding Comedy Central, Paramount Network and Smithsonian channel to the portfolio. Elsewhere CBS bought out Lionsgate’s 50% share in original Schitt’s Creek broadcaster in the US – Pop TV – in March 2019.

NBC responds with Peacock

Another new premium SVOD service – Peacock – was launched by Comcast-owned NBCUniversal for US audiences in the summer of 2020, also with a free tier offering thousands of hours of ad-supported content in addition to paid subscriptions. It was initially trialled in April with customers of Comcast’s Xfinity X1 and Flex entertainment services which deliver content either through connected set-top boxes (STBs) or voice-controlled 4K streaming devices bundled through Xfinity cable Internet broadband. The service was extended nationwide in the US in July for access iOS and Android Apps; LG Smart, Vizio and Android TVs; Playstation 4 and Xbox One games consoles; and Chromecast and Roku streaming devices.

Comcast chief executive Brian Roberts told investors the service had exceeded 15m sign-ups by September[i], with hopes for 30-35m active accounts by 2024. Peacock costs US$5 a month for the full catalogue plus ads (Premium), or US$10 a month for the ad-free equivalent (Premium Plus)

An estimated two-thirds of Peacock’s content is available for free under a pure advertising video on demand (AVOD) model for registered users, a proposition which is common in other parts of the world but not the US. ViacomCBS too offers an AVOD service following its US$340m acquisition of Pluto TV in January 2019, and a service subsequently extended into 17 Latin American markets in April 2020[ii]. Pluto TV offered around 20k hours of Spanish language programming and 24 channels at launch, with plans to expand to 100 channels by April 2021. Viacom previously laid a foundation for its Latin American expansion with the US$345m acquisition of free to air Argentine broadcaster Telefe in November 2016[iii].

Despite a broader slowdown in the advertising market triggered by Coronavirus lockdown restrictions, ViacomCBS noted robust growth in Pluto TV advertising revenue. Even so, it will be paying subscribers that deliver the lion share of growth for US streaming services going forwards. However, providers will have to navigate stiff competition in an increasingly crowded market and consider their distribution and billing arrangements carefully to reach the maximum number of customers.

VIacomCBS is likely to expand Paramount+ in emerging markets soon. To be successful in markets with low credit card penetration, direct carrier billing and telco subscription bundling will be vital in driving acquisition and adoption at scale amidst every increasing competition in the SVOD market.

[i] Comcast Cable is trending to add more than 500,000 broadband subscribers in the current third quarter, which would be a new record, Brian Roberts tells a virtual Goldman Sachs conference, Hollywood Reporter, 15th September 2020

[ii] Pluto TV launches in Latin America, Digital TV Europe, 8th April 2020

[iii] Viacom Acquires Argentine TV Network Company Telefe for $345M, The Hollywood Reporter, 15th November 2016

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