Market Insight

Acorn TV, niche online SVOD channel, more than doubles subscribers

February 01, 2017

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US-based content distributor, RLJ Entertainment, has reported that subscribers to the Subscription Video-on-Demand (SVoD) service, AcornTV, grew by 120% last year to reach to 430,000 by December 2016, up from 195,000 in December 2015. AcornTV, which launched in February 2013, offers TV programming from the UK, Ireland, Australia, and New Zealand to the US audiences. The service’s line up includes exclusive programming from the UK and Canada, such as ITV’s Agatha Christie's Poirot, and Doc Martin, as well as the recent CBC Canada’s Murdoch Mysteries.

RLJ Entertainment also noted a quadrupling of US subscribers to another of the company’s proprietary OTT channels UMC (Urban Movie Channel) from 5,000 to 20,000 over the same time period. Launched in January 2015, UMC’s offering is also considered niche, with content focused for African American and urban audiences.

Both Acorn TV and UMC are available in the US and Canada and cost are available for $4.99 per month, or $49.99 annually when purchased directly from RLJ, as an Amazon Channel or by in-app purchase from Google Play, but when billed through Apple’s App store the service cost $6.99 per month or $69.99 annually.

Our analysis

Acorn TV is one of a number of online channels that have developed a business by focusing on specific content genres with niche but distinct audiences. Whilst these services are likely to have struggled to develop substantial audiences via traditional pay TV platforms, going more or less direct to consumer online allows services like Acorn TV, Crunchyroll, and Shudder to develop businesses by aggregating audiences that are likely too small or geographically dispersed for individual pay TV operators to be interested in addressing. 

Such channels have been relatively easy for the pay TV industry to dismiss in the past, as a result of far lower subscriber numbers. In generating this volume of subscriber number Acorn is markedly different with subscriber numbers approximately half that attributed to Starz’s online service; significant enough to generate interest from traditional pay TV.

However, this does not mean that Acorn TV is well positioned to launch a conventional channel back onto traditional TV platforms. Traditionally the revenue share for a la carte channels like HBO has traditionally been in the region of 50% of the fees charged by their operator partners. Applying this to Acorn TV suggests an operator-carried version of the channel would need to charge in the region of $10 and, it seems unlikely that Acorn’s line up of international programming would attract a large audience at that price. Instead a more likely route for Acorn TV onto traditional TV would be to take a leaf out of Netflix’s book and offer its online service via operator’s connected set top boxes in return for a far lower monthly revenue share.

This approach is potentially attractive not just to Acorn, but other niche online channels as they get to grow their footprint and retain their attractive prices; whilst operators can maintain their position as the central entertainment hub in the home and use traditional TV bandwidth for channels with more broad-based appeal.

Research by Market
Media & Advertising
Digital Media Video
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