HOLLYWOOD—The recent turn of global events, most notably, the COVID-19 pandemic and restrictions in movement, lockdown, with massive job losses, have resulted in people staying home more than ever. With so many people staying home, more and more have turned to TV for entertainment to replace forms of recreation that are now restricted. Many turned to cable TV networks with an extensive lineup of television channels, while others turned to streaming services.
Since most people spent a lot of time in front of their TV sets last year (2020), a number of new trends have sprung up, while others were accelerated. For instance, it’s no news that many Americans have been cutting the cord for various reasons, chief of which is the cost of traditional TV. A recent survey by Trade Desk found that the number of subscribers planning to cut the cord in 2021 is almost double those that reported cutting the cord in 2020. The numbers are 15% for 2020 and 27% for 2021. This figure is significantly more than the estimated 3% decline that eMarketer cited ahead of 2020.
While it’s true that some people are cutting the cord, it is equally true that many cable TV providers have a terrific and extensive lineup of programming that can be customized for each household. Many consumers still find that one way or another; they need these services at least for the foreseeable future.
The trends springing up seem to be signaling a new era in the consumption of TV. Since a remote working culture is on the rise, with many working from home with fast internet service, while others are hard-pressed for money, a new ratio for the consumption of streaming services and traditional TV has emerged. People are consuming streaming services 68% of the time compared to 28% for conventional TV.
A new study by Ampere shows that in the US, the average household now has four streaming services. That is twice the average number of streaming services per average household in the U.K., Spain, Italy, Germany, and France – the ‘big five’ Western European markets – where there were over 400 million subscriptions to streaming services in the third quarter of 2020. According to the study, about 10% of these new subscribers had five or more streamlining services.
Trade Desk’s chief revenue officer, Tim Sims, says that the decline in traditional TV subscriptions is not due to people falling out of love with TV, but that they have discovered more convenient ways of consuming it. Even the traditional mainstays of cable TV, including live sports, have not stopped consumers with high speed internet service from switching to streaming services.
The pandemic resulted in a pause in live sports for a while. About 39% of sports consumers now watch their live sports using connected TV, such as social media platforms and ad-supported streaming. According to Trade Desk, of the US consumers still maintaining their cable TV subscription, only 30% cite live sports as their reason. Only nine months before the study, about 60% cited live programming, which includes live sports, as their reason.
An exciting find of the study, however, is that as more Americans turn to streaming services and Connected TV, they are not willing to spend more than a certain amount on these subscription services. The survey showed that about 51% of these consumers do not plan to spend more than $20 per month, in total, on these services. TV viewers, according to the survey, are more than five times more likely to prefer low-cost or free streaming TV with ads to streaming services that sport higher monthly subscription fees and have no ads. The figures are 72% to 14% respectively.
The streaming services have been using and trying different models to ensure they cater to their audiences. Still, some of these services are losing out on many potential subscribers. Netflix, for example, is a big SVOD (Subscription Video on Demand) service. This means that while it has seen an increase in new accounts in 2020, there are still many TV viewers that the service is missing out on because of its subscription model.
Some other models that some streaming services have tried include TVOD (transaction Video on demand), PVOD (Premium Video on Demand), and AVOD (advertising or Ad-based Video on Demand). Some services have even tried a combination of these models. One combination includes the AVOD model combined with SVOD. In this model, the services let you watch some of its content free and show you adverts while you do so, but they also reserve some other content that can only be accessed with a subscription.
With more people switching to streaming services but not wanting to pay more than a certain amount in subscription, a new trend is bound to emerge – bundling or compounding multiple services into a single package. This seems to be the next step in the streaming market’s evolution. Ampere predicts a situation where there will be combining and discounting of streaming services packages in the next year, and they believe this trend will grow significantly.
As stated above, some streaming services are already compounding business models, but an acceleration of collaboration by service providers is on the rise.
As many people transition to CTV, advertisers are also reducing the TV ads budget and increasing their budget for adverts on CTV. A different survey of about 150 advertisers discovered that because of the pandemic, marketers had to revise their TV plans. This survey by Advertiser Perceptions also found that CTV is currently the number 1 channel choice for marketers to reallocate their campaign budgets. They indicated they would be allocating 18% of their ad spend to CTV going forward.
It is true that the streaming services have come to stay and that cord cutting will continue until the cable networks come up with a strategy to retain and satisfy their subscribers. The current global pandemic has resulted in new trends regarding how TV is consumed. Still, even as we look forward to the next trends in TV’s evolution, we can only speculate. No one can tell for sure what is next. The events of the last year have taught us that much.