As the streaming industry navigates economic headwinds, TiVo’s Q2 2024 Video Trends Report highlights a major shift in how consumers are approaching their entertainment subscriptions. According to the report, which surveyed over 4,000 adults across the U.S. and Canada, people are pulling back on entertainment spending, favoring bundled services and ad-supported models over standalone subscriptions.
With the average number of services dropping from 10.9 in 2023 to 9.1 in 2024, consumers are consolidating their streaming options while still seeking a rich entertainment experience. Despite this reduction, TiVo’s findings suggest that viewers haven’t decreased the time spent watching content. Instead, they’ve embraced ad-supported video on demand (AVOD) and free ad-supported streaming TV (FAST) services, often bundled with subscription video on demand (SVOD) services, to keep costs in check without sacrificing their entertainment needs.
Scott Maddux, Vice President of Global Content Strategy at Xperi, explained the industry’s response: “In the past, we’ve seen over-the-top (OTT) service providers trying to assess the limits of consumer entertainment spending, and they are now seeing where consumers are willing to draw the line. Now, the same OTT service providers are starting to see the promotional and monetary benefits of creating bundles with their subscription video on demand, ad-supported video on demand, and free ad-supported television service options.”
Ad-Supported Services Gain Traction
The report reveals that ad-supported tiers are becoming more popular, with 64% of respondents now using them, a notable increase from last year. Consumers are increasingly showing a willingness to watch ads in exchange for lower prices. This growing tolerance for ads comes with a key stipulation—advertisers need to up their game. The quality of advertisements has improved, making them less intrusive, which is making the idea of AVOD and FAST a more acceptable and even desirable option.
TiVo’s data underscores the potential for service providers to retain customers by bundling services. Around 62% of respondents stated they’d be more likely to stick with their broadband provider if it included additional streaming options. The bundling trend is fast becoming a strategy for companies to reduce customer churn while enhancing overall value.
Additional Key Insights from TiVo’s Q2 2024 Video Trends Report
The report also dives into other significant trends that reflect how consumers are interacting with their streaming services and discovering new content:
- The Discovery Dilemma: Nearly 85% of respondents shared that they tend to browse extensively before settling on what to watch. Almost 73% go into more than one app in a typical viewing session to find something they like, underscoring the challenge of navigating the vast content available across platforms.
- Organic Recommendations Still Rule: Despite the prevalence of algorithm-driven suggestions, 50% of respondents still find word-of-mouth recommendations from friends more reliable, with 40% also citing ads that run during other shows as effective ways to discover content.
- Slight Decline in Social Video Usage: The usage of social media and user-generated content platforms for video viewing has declined slightly, from 85% in Spring 2023 to 80% in Q2 2024. YouTube remains the top platform for this kind of content, followed closely by TikTok.
- Amazon Rules TVOD: Transactional video on demand (TVOD) usage has dropped among pay TV subscribers, falling from 54.3% in Q2 2023 to 45.7% this year. However, broadband-only subscribers’ TVOD usage has remained stable, with Amazon Prime leading the pack as the top TVOD service, followed by YouTube.
These findings give a broader understanding of how consumer preferences and behaviors are shaping the future of entertainment, with more reliance on organic recommendations and bundled services becoming the norm.
A New Era of Streaming Strategy
TiVo’s findings indicate a critical shift in the entertainment landscape. The once-expensive SVOD model is being replaced by a hybrid approach that values customer retention over maximizing monthly revenue. The bundled experience—combining ad-supported tiers with premium subscriptions—might just be the future of streaming, offering customers the content they love without overwhelming them with individual subscriptions. As Maddux stated, “Allowing content providers to monetize across the full spectrum from subscription to ad-supported is helping to keep their customers under one roof.”