Tuesday, December 17, 2013

Streaming Statistics by Age Group

Streaming Statistics by Age Group by Chris Harrington

Netflix vs Cable

British Wrestling Historian John Lister pointed out an intriguing factoid that was published by Mashable on December 5:
Netflix Is Almost as Popular as Cable Among Young Adults: Among 18-36 year-old adults, 46% subscribed to Cable TV while 43% subscribed to Netflix.

The inverse directions (by age) for Cable TV versus Netflix/Hulu Plus/Amazon Prime really say a lot about who is (and is not) embracing streaming technology.

Combined with the information from Nielsen on how people are watching over-the-top video, the point has really been hammered home about how differently people watch streaming content (for instance, almost half of subscribers were watching Netflix directly on a computer).

Yet, it wasn't until I was discussing the viability of the proposed over-the-top (streaming) WWE Network with @holycowie that I was challenged to dig even deeper and to cross reference age and streaming medium.

A quick search brought up an article, "Pay-TV Penetration Remains Strong Among Netflix-Loving Parents" which noted:
Parents over-index in subscriptions to Netflix streaming service...(also more likely to subscribe to Amazon Prime and Hulu Plus)... while their their pay-TV subscriptions appear to be unaffected.

The Harris Interactive Poll (October 2013)

More importantly, I finally found the source for both the MarketingChart and Mashable pieces - a new Harris Interactive Poll (released 11/25/2013).  Harris conducted an online poll for their"Tech Tracker" series about SmartPhone ownership (52% of Americans), planning tech purchases in the next three months (37%) and most interestingly the relationship between streaming content and cord cutting by age group.
(PDF of results is available at http://www.harrisinteractive.com/vault/Harris%20Poll%2089%20-%20Tech%20Tracker_11.25.2013.pdf )

Raw Data from the Harris Poll:

U.S. Adult Ownership:
(keep in mind this survey was taken online so there's bound to be some bias there)

  • 94% owned a computer (67% had a laptop, 66% had a Desktop)
  • 80% owned a Mobile Phone with 52% indicating it was a Smartphone (28% Android, 24% iPhone)
  • 36% owned a Tablet (19% had a iPad/iPad Mini, 10% had a Amazon Kindle Fire Series tablet)
  • 21% had a stand-alone BluRay player (no breakout of what percentage were internet connected)
  • 19% had a XBox 360 and 15% had a PS3
  • 12% had a HDTV with built-in internet capabilities (44% had HDTV without)
  • 6% had "streaming media box" (such as Roku, AppleTV)
Of course Netflix has two services - Streaming and Disc Delivery:

  • 29% of U.S. Adults subscribed to Netflix (25% for Streaming, 9% for Disc Delivery)
  • 18-36 years old: 41% Netflix Streaming  / 9% Netflix Disc Delivery / 17% Amazon Prime / 8% Hulu Plus
  • 37-48 years old: 24% Netflix Streaming /  13% Netflix Disc Delivery / 15% Amazon Prime / 5% Hulu Plus
  • 49-67 years old: 18% Netflix Streaming  / 7% Netflix Disc Delivery / 10% Amazon Prime / 3% Hulu Plus
  • 68+ years old: 9% Netflix Streaming  / 7% Netflix Disc Delivery / 6% Amazon Prime / 1% Hulu Plus37% of Parents that have a child under the age of 18 subscribe to Netflix Streaming
  • 18-36 years old: 60% have TV service (46% Cable / 16% Satellite)
  • 37-48 years old: 76% have TV service (48% Cable / 30% Satellite)
  • 49-67 years old:  82% have TV service (55% Cable / 28% Satellite)
  • 68+ years old:  88% have TV service (63% Cable / 25% Satellite) 

Key Takeaways
  • Traditional Desktop and Laptop Computers are still going to be the massive gateway for over-the-top video to reach consumers (though Tablets and SmartPhones are next largest opportunities)
  • Streaming Media Boxes like Roku/AppleTV are exciting future technologies for "cutting the cord", but they are still very uncommon (half as common as internet HDTV, 1/3 as common as XBox 360, 1/6 as common as Tablet)
  • Parents with children under 18 have embraced streaming technology via Netflix
  • Satellite's hold is similar for 37+ ages groups while Cable especially grows in the 68+ age group
Looking at the actual 2010 U.S. Population by age, with a few approximations, I approximated age groups at: 
  • Echo Boomer (18-36 years old): 78.6 million (x 41% Netflix Streaming)
  • Gen X (37-48 years old): 50.5 million (x 24% Netflix Streaming)
  • Baby Boomer (49-67 years old): 69.0 million (x 18% Netflix Streaming)
  • Mature (68+ years old): 31.4 million (x 7% Netflix Streaming)
Applying the Netflix streaming numbers above would imply about 59.6 million adults have access to a Netflix streaming subscription.  If you include children under 18, that'd jump to 87.3 million people in the US.

Keep in mind that Netflix only has 31.1 million domestic streaming "members" as of 9/30/2013 so this number so the near 60 million number means (a) there could be some bias in the poll towards overstating Netflix's prevalence as well (b) that more than one person in a household has access to a single membership.

So, we'd need to apply a ratio to any "viewer to subscriber" calculation: 35.6% of people (including children) or 52.2% of Adults.

Implications for WWE Network

Let's look at a base of about 4 million weekly WWE viewers. Page 15 of WWE CFO George Barrios' latest Investor Presentation reflects the WWE's claim that they have a "balanced age distribution".
  • 21% - below 18 years old  (x 37% Streaming = we'll use the Parents number)
  • 24% - between 18 and 34 years old (x 41% Streaming)
  • 22% - between 35 and 49 years old (x 25.7% Streaming = blend of Echo/GenX/Boomer)
  • 33% - above 50 years old (x 15% Streaming = we'll blend the Baby Boomer/Mature numbers)
If they had the same adoption rates of Netflix Streaming U.S. Adults, that would come up with 1.12 million households with access to the over-the-top WWE Network (assuming distribution on the same platforms as Netflix).  

(Yes, this doesn't take into account the price difference.)

Approximate 1,128,500 WWE Network Viewer Demographics (based on 4 million base)
  • 310,800 viewers (children under 18) out of 840k
  • 393,600 viewers (adults 18 to 34) out of 960k
  • 226,160 viewers (adults 35 to 49) out of 880k
  • 198,000 viewers (adults 50+) out of the 1.32 million
But assuming that a single subscription will give access to more than one person (as evidenced by the Netflix calculations), we need to apply an adjustment between 35%-52% to this number.

35.2% of 1,128,560 viewers (all ages) = 397,253 subscribers
52.2% of 817,760 viewers (18+ viewers) = 426,871 subscribers

Again, it seems to suggest that somewhere around 415,000 subscribers on a 4 million weekly base would be realistic if people were to adopt to the over-the-top WWE Network akin to Netflix.

415,000 annual domestic subscribers is about $49.8 million in annual revenue which would be twice what WWE Studios has ever produced and about 1.5x times what the Digital Media segment normally does. However, that would not cover both start-up costs and revenue cannibalization.

Chris Harrington (@mookieghana)

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