The United Kingdom is a leading market in Europe for online video but adoption of subscription services remains substantially lower than in the United States. Despite the hype, services like Netflix are currently only available in a quarter of homes in the United Kingdom. That leaves plenty of room for growth, but so far such services seem to be complementary to traditional television, particularly pay television.
Research from Parks Associates suggests that 55% of broadband households in the United Kingdom watch television programming and movies online, compared to 70% in the United States. However, only 30% of broadband households in the United Kingdom subscribe to online video services, compared to 64% in the United States.
“In many parts of Europe, pay-TV penetration is lower than the United States, and European consumers have been reluctant to pay for video in the past due to so many ‘free’ options such as the BBC iPlayer, said Brett Sappington, the director of research at Parks Associates. “As more pay options enter the market, with content unavailable anywhere else, they are slowly changing the culture of video viewing in Europe.”
Netflix is increasingly popular in the United Kingdom. Yet fewer than one in five households subscribes to Netflix. The adoption of pay television remains stable.
The informitv Multiscreen Index shows that the number of pay-television households in the United Kingdom and Ireland rose by over 800,000 homes in 2015. This was driven mainly by Sky, which gained 533,000 customers. Some of these may have been for its NOW TV online offering, although Sky does not break out the numbers.
A new quarterly report from BARB provides some insight into the adoption of Netflix and other subscription online video services. The television research organisation interviews over 53,000 people a year in the United Kingdom for its Establishment Survey.
According to this research, less than a quarter of households in the United Kingdom claim to subscribe to one of the three main services: Netflix, Amazon or NOW TV. Netflix is by far the market leader, in over 5 million homes, up from under 3 million in two years. Amazon is in around 1.5 million households and the NOW TV service from Sky is in less than a million.
For many households, online video subscription services are as much a companion as a competitor to pay television. Take-up is highest in homes that have Virgin Media cable or have YouView from BT or TalkTalk, which are generally households with broadband. Interestingly, it is even higher in those homes that subscribe to Sky Movies, for which services like Netflix could be seen as a direct competitor.
Online video subscription services are significantly more popular in households with children. However the Establishment Survey data does not support the commonly expressed view that an entire generation of young people has more or less abandoned traditional television in favour of binge viewing on Netflix or Amazon Video.
Less than half of 16-24 year-olds in the United Kingdom have access to such a service. Only three in ten children live in a household that subscribes to Netflix. That said, 40% of those aged 16-24 are in a Netflix household.
There are around 0.44 million homes in the United Kingdom, out of a total of 27.6 million, that claim to have a television but no access to a traditional linear television platform.
The number of homes without a television has grown from 0.9 million at the beginning of 2010 to 1.3 million at the end of 2015. However, the number of homes with a television has risen slightly, from 26.0 million to 26.3 million.
Non-television households are also slightly less likely to have broadband or subscribe to an online video service. Across the social spectrum they are also likely to have fewer computers and be less likely to have a tablet.
Only 19% of homes without a television, or less than a quarter of a million households, subscribe to an online video service.
Nearly half of occupants of households without a television are aged between 16 and 34. 44% of households without television are single person homes and less than a fifth of households without television have children. The key question is whether they will become a television household if they have children.
The OTT Video Market Tracker is available from Parks Associates. The Multiscreen Index is available from informitv. The UK Television Landscape Report is available from BARB.