It’s an existential question for video industry strategists: How many services are people willing to use?
A higher number means more latitude for emerging providers to find a footing. A lower number squeezes out opportunity. Thus, a duality: Newcomers to the category hope for a wider complement. Veterans, hoping to protect their turf, prefer a slimmer pool.
Right now the news seems to favor the former camp, as consumers appear to be widening the video tent. According to TiVo’s latest Video Trends Report, the average number of video services U.S. adults use swelled to 11.6 from 8.9 in the space of 12 months — Q4 of 2021 to Q4 of 2022. (Note that “services” refers to independent sources of video. Netflix is a “service” and so is a pay TV channel bundle.)
The realization that U.S. consumers are making room for more video services augurs bright for newer streaming entrants, especially those targeting selected demographic cohorts. TiVo’s researchers, for example, found millennials (people 26-41) top the charts, using more than 16 separate video services. That’s appreciably more than baby boomers (6.2) and 42-to-57-year-old Gen Xers (12.2).
But the findings don’t guarantee an expansive appetite will last forever. In fact, there are signs that consumers may be poised to pare back. Deloitte’s 2023 Digital Media Trends report, released in April, found nearly half of millennials polled said they planned to jettison at least one subscription video service in the succeeding 12 months, with budget concerns a big reason why.
Hints of video fatigue are popping up elsewhere. Researchers for PwC believe global over-the-top video revenues will moderate to a 7.6% annual growth pace through 2026, compared with nearly 23% in 2021. The easing of the health pandemic is one reason for the settling down, but so are limits to what consumers are willing to abide. “Given the seemingly unlimited options arising around the world and the competition for the same limited pool of consumer dollars, something has to give,” PWC points out in its most recent Global Entertainment and Media Outlook report.
To that point, if there is growth in the picture for the streaming video category, it seems likely to come from the ad-supported video-on-demand (AVOD) and free ad-supported streaming television (FAST) camps — the arena of providers like Fox Corp.’s Tubi or the Crackle family of services.
Writ large, the recent findings suggest that despite ongoing growth in service patronage, there may be some hard edges forming around the broader consumer appetite for video services.”
In contrast, after several years of impressive growth, the number of premium streaming video services per U.S. home looks to be topping out, per a recent analysis by Doug Shapiro, a Boston Consulting Group senior adviser and former strategist for Time Warner Inc.’s Turner division. Blending findings from Ampere Analysis, Parks Associates and the U.S. Census Bureau, Shapiro found that in 2022 the average number of paid streaming services per streaming home (Amazon’s Prime Video included) barely budged, edging up to 3.8 from 3.7 a year before. This finding is consistent with TiVo’s conclusion that “AVOD and FAST services continue to capture a greater share of the market.”
Writ large, the recent findings suggest that despite ongoing growth in service patronage, there may be some hard edges forming around the broader consumer appetite for video services. It’s a realization that may help explain why prominent players like The Walt Disney Co. and Warner Bros. Discovery are moving toward broad, do-it-all streaming combinations rather than leaning into multiple niche brands.
For emerging players, it may be encouraging to see research from the likes of TiVo concluding that consumers are inviting more video services into their homes and their lives. But business strategists who assume an ever-expanding appetite may end up disappointed. As PWC points out, the video times are indeed a-changing: “For the first time,” PWC observes, “players are confronting the prospect that there may not be enough individual subscriptions to feed their growth ambitions.”
Media, Math and Myth blogger Stewart Schley writes about media, telecommunications and the business of sports from Denver. He is currently writing a book about the transformation of the U.S. cable television industry.
