There’s a massive change in the media industry as legacy pay-TV services are declining and streaming options are rising; however, these companies are shifting to meet consumer’s needs, according to Parks Associates report Video Delivery: Maximizing Efficiency and Monetization.
The report examines how companies are streamlining their operation costs to remain profitable in a fragmented market. This includes transforming their content strategies, speeding up content production, and slashing costs.
Notable Takeaways
- Pay-TV’s Decline: Only 36% of US internet households still subscribe to traditional pay-TV services.
- Ad-Based Streaming Surge: 42% of US internet households now watch free ad-supported streaming services, a significant increase from 20% four years ago.
- Mobile-First Viewers: Young adults (ages 18-24) are leading the charge in mobile-first content consumption, watching more video on their phones than on TVs.
- Streaming Services’ Struggles: Streaming platforms are grappling with high churn rates and the challenge of finding sustainable business models. The number of households subscribing to more than eight services has dropped from 29% in Q3 2023 to 20% in Q1 2024.
Streaming Accessibility & Affordability Reach All-Time Highs As the Pay-TV Model Fades
As more consumers transition to cord cutting, the research shows that only 36% of U.S. internet households still subscribe to traditional pay-TV services With cable bills rising and flexible alternatives taking over, pay-TV’s dominance has dwindled. Streaming offers viewers the freedom to choose what they want, when they want, without being shackled to expensive packages filled with channels they never watch.
The flexibility of the streaming market has made it ideal for consumers as it has something for everyone. From subscription video-on-demand (SVOD) services like Netflix and Disney+ to free, ad-supported platforms like Tubi and Xumo Play, there’s no shortage of options. In fact, 42% of U.S. internet households now use free ad-supported streaming services—a huge leap from just 20% four years ago, according to the study. These platforms not only save viewers money but also offer impressive libraries of content.
With an increasing amount of viewers willing to watch a few ads, ad-supported models are a win-win. A staggering 59% of households are fine with ads if they lower their subscription fees, which proves that affordability and entertainment can go hand-in-hand.
The Battle Between Ad-Based Streaming & Social Media
On top of battling each other, stream services are also going head-to-head with social media for viewers’ and advertisers’ dollars, according to the study. Platforms are pouring resources into making ads smarter and less intrusive. Technologies like Server-Side Ad insertion (SSAI) ensure ads are seamlessly integrated, avoiding buffering and maintaining high video quality.
However, with ads, consumers do not want to see the same ad over and over again which makes personalization key. The study showed that ads tailored to individual preferences drive engagement and prevent viewer fatigue. Only 29% of households felt ads on streaming services were relevant to them in early 2024, down from 41% in 2023. The study highlights that there is plenty of room for innovation in this space.
The Rise of Mobile-First Viewing
The research shows how mobile devices are changing younger audiences, especially those aged 18–24, and are redefining how content is consumed. They’re mobile-first viewers, with phones now rivaling TVs as the go-to screens for entertainment. The research from Q1 of 2024 shows that 65% of U.S. internet households reported watching video on a mobile phone in the last 30 days. This shift highlights the flexibility and convenience of streaming platforms.
The rapid growth of mobile video consumption can be credited to three things:
- Convenience: Smartphones allow viewers to stream content anytime, anywhere. This is particularly attractive for on-the-go lifestyles.
- Personalization: Mobile apps often use advanced algorithms to recommend personalized content, making it easier for users to discover shows and movies they’ll enjoy.
- Social Media Integration: Platforms like TikTok, YouTube, and Instagram are designed for short-form video consumption, further fueling the mobile-first trend. For younger audiences, these platforms are just as important—if not more so—than traditional streaming services.
Hybrid Models Offer the Best of Both Worlds
With viewers fragmented, one size doesn’t fit all when it comes to streaming. Hybrid models that blend subscription, ad-supported, and transactional options are on the rise, according to the research.
Consumers who want ad-free binge sessions can go premium. If you’re searching for budget-friendly options then ad-supported is perfect. For those looking to catch the latest blockbuster: renting it or buying it on a transactional video-on-demand (TVOD) service like Prime Video is ideal. Because they offer flexibility and resilience, by integrating different monetization strategies, companies can generate revenue and adjust quickly to market changes in viewer demands and evolving technologies.
For instance, Comcast has embraced hybrid strategies, offering everything from live TV to ad-supported streaming and premium on-demand options. The telecommunications giant just announced a new Sports & News TV package that pairs over 50 live sports and news channels with 100+ FAST channels and Peacock Premium. Comcast also allows subscribers to personalize their package with Netflix and Apple TV+ add-ons for a customized viewing experience.
The study highlighted other major players who are using hybrid models to meet consumer needs and company revenue growth.
Other Key Players Embracing Hybrid Models
- Disney+: Initially launched as an ad-free service, Disney+ introduced ad-supported tiers in 2022 to lower subscription fees and reach new audiences. Its parent company also operates Hulu, which has long utilized a hybrid approach.
- Amazon Prime Video: In addition to its subscription service, Prime Video offers transactional rentals and purchases for movies and shows not included in the standard library.
- YouTube: Balancing free, ad-supported videos with its YouTube Premium subscription, YouTube caters to both casual viewers and those seeking an ad-free experience.
- Paramount Global: Platforms like Paramount+ combine SVOD and AVOD tiers, while its free streaming service Pluto TV delivers FAST channels and Philo is an affordable live TV option.
Tips for Cord-Cutters Looking to Save
Using the information gathered from the research, there are some ways that cord cutters can save money and still stream their favorite content:
- Audit Your Subscriptions: Start small. Pick 2 or 3 streaming services that align with your viewing habits.
- Invest in a Good Internet Connection: Streaming relies on solid internet speeds. Consider upgrading your plan if buffering becomes an issue. There are different ways to save money on home internet.
- Explore Free Options: Platforms like Plex, Pluto TV, and Tubi offer great content without the cost. They’re perfect for casual viewing.
- Use Recommendation Features: Many platforms now offer personalized suggestions. The study shows only 7% of viewers take advantage of this feature, but it can help you discover hidden gems.
From mobile-first content to innovative ad strategies and hybrid models, the future is bright for cord-cutters. As streaming services continue to innovate, these companies look to be keeping up with viewers’ demands and changing the standards for how users engage with video.