The State of OTT Video: Mainstream, As Streaming Devices Take Center Stage

July 11, 2018

OTT video viewing is a commonplace media activity in the US, growing not only in reach but in time spent, according to a comScore presentation [download page]. Some 59.5 million US homes – representing almost two-thirds (63.5%) of all homes with Wi-Fi – watched OTT video in April of this year, marking a 17% increase year-over-year.

Furthermore, these OTT homes watched 54 hours of content on average during the month of April, a 28% increase from the year-earlier period.

Streaming Boxes and Sticks Take Center Stage

While there are various forces driving the growth of OTT video (including a move away from traditional TV on the part of youth), one of the biggest stories relates to streaming devices, alternatively referred to as “living room devices” or “OTT devices.” These have seen rapid growth in use in recent years, with advertisers taking note.

The comScore presentation quantifies the extent to which these devices have surged in popularity. For example, as of April 2018 almost half (47%) of US Wi-Fi households own a streaming box/stick, up from 40% a year earlier.

Penetration of smart TVs is also on the rise: 37% of Wi-Fi households owned a smart TV as of April, up from 30% the previous year. This is likely to only rise, given data indicating that smart TVs now represent almost 9 in 10 TVs sold in the US.

Recent figures from Nielsen also show broadening penetration of streaming devices. In Q4 2017, some 70% of US people ages 2 and older (including 72% of Gen Z and Millennials) had access to a smart TV, internet-connected device (such as a streaming stick) and/or video game console, up from 64% during the year-earlier period.

For its part, comScore’s report indicates that fully 8 in 10 US Wi-Fi homes (homes with broadband service) owned at least one of the following OTT devices in April: streaming box/stick (47%); smart TV (37%); gaming console (31%); DVR/set-top box (23%); and/or internet blu-ray player (8%).

These are having a strong impact on streaming activity. Some 79% of homes with at least one OTT device stream content. Streaming behavior is most prevalent among homes with streaming boxes/sticks (77%) and smart TVs (71%), as more than two-thirds of each group stream OTT content on those devices.

The analysts note that “streaming box and stick devices are still driving the OTT category forward.” Case in point: these devices accounted for the single largest share of OTT viewing hours during April (36%), almost equal to the streaming hours represented by smart TVs (20%) and gaming consoles (18%) combined.

Indeed, households watching OTT video content via streaming boxes and sticks not only represent the largest number of OTT-streaming households, but also watch the most viewing hours per household (53 per month). That’s about 75% more hours per month than spent by smart TV households (30).

Roku devices continue to lead the market, now in 20.2% of Wi-Fi households as of April, up from 16.4% in April 2017. But the Amazon Fire TV has been quickly closing the gap, jumping from 13.9% to 20% of Wi-Fi households during that same period.

(The comScore analysts note that Roku OS is also used on about 1 in 8 smart TVs.)

Where There Are Kids, There is OTT

The report also identifies an interesting demographic for which OTT has strong appeal: households with children. Fully 77% of households with kids stream OTT video, per the report, a rate that’s 37.5% higher than households without children, 56% of which stream OTT.

Focusing in on households headed by 30-49-year-olds, comScore reveals that an impressive 81% of such households with children stream OTT, compared to 71% of those without children. Additionally, those with children spend considerably more time streaming OTT (68 hours per month) than those without children (48 hours).

This is an important point to consider for traditional TV providers, who not only have to contend with the ascent of mobile devices, but also growing competition from digital video. In a recent in-depth of analysis of traditional TV viewing behavior, MarketingCharts identified children as a key point of emphasis for providers, as they watch more TV than teens and young adults as a result of a smaller decline in viewing. This could be an opportunity for pay-TV providers, as broadcast programming is generally seen as family-friendly and Netflix has not focused its originals budget on kid-focused content. (Purchase The State of Traditional TV Viewing report here.)

Nonetheless, as this latest data from comScore shows, pay-TV providers may already be losing the battle for kids’ attention.

Top 4 OTT Services Combine for Three-Quarters of Streaming Time

In last year’s OTT report, comScore’s data showed that OTT households spent more time with Netflix than with Amazon Video, Hulu and YouTube, combined. While this year’s report doesn’t break out the share of streaming time occupied by each, it does note that these “big 4” combine for 75% of OTT streaming time spent during April.

Notably, as with last year’s study, comScore’s most recent data shows that Hulu users have the highest engagement, averaging 86 hours watching on the platform during the month of analysis. That compares with 78 hours of YouTube viewing by its users, 70 hours for Amazon Video, and 62 hours for Netflix.

Netflix continues to boast the broadest penetration of any streaming service, at almost three-quarters (73%) of OTT streaming households. It’s followed by YouTube, at half of streaming households, with Hulu (36%) and Amazon Prime Video (28%) further back.

These are the only 4 services to boast a reach of at least one-quarter of streaming homes. By comparison, 53 OTT apps reach 5% or fewer streaming homes.

Finally, it’s worth noting the growing popularity of pure-play virtual multichannel video programming distributors (vMVPD), such as Sling, DirecTV Now and PlayStation Vue. These services have been gaining plenty of subscribers in recent years, and now represent 10% of OTT streaming time as they gain appeal among homes with older heads of household.

The study indicates that as of April 2018, the number of vMVPD households has grown by 58%, while the number of hours spent viewing vMVPD services has increased by 53%. About half of time spent by OTT households with a vMVPD service is with that service, and almost all vMVPD viewing occurs on streaming boxes and sticks.

The full presentation is available for download here.

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