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Streaming Numbers in the News

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Targeting streaming viewers is becoming harder. Today, services are looking at understanding what viewers will buy, not their personal information. Here’s a roundup of a few recently published reports.

According to a 2022 Whip Media survey on customer satisfaction, the number-one reason for Netflix’s widely reported recent subscriber churn is price; more than two-thirds of respondents cited “cost” as their reason for leaving the service. Given that they also identified HBO Max as the most satisfying SVOD service, this seems a little implausible. Netflix’s standard service costs $15.49 per month, and HBO Max’s ad-free subscription price $14.99. I don’t think 50 cents is really the breaking point. This leads me to believe that survey respondents are often multidimensional. When they were asked if they could keep only one service, which one did they choose? The one with “flix” in the title.

Compared to the 2021 survey, this year, there was a 12% decline in respondents’ likelihood to keep their Netflix service. “If we had done this survey at a different time, after the release of Stranger Things, the numbers may have been different,” says Eric Steinberg, Whip Media’s media research and insights lead.

“We asked people who are currently subscribers of Netflix, ‘Would you switch to a lower-priced tier in exchange for watching advertising?’ ” explains Steinberg. “Now, it’s a bit of a loaded question, because we don’t have a price point yet, so we said, ‘For some lower price for some amount of ads, would you be willing to switch?’ ” The result: 5% said they definitely would, and 9% said they likely would, totaling
14%. Maybe viewers need to see how the ad-supported content is delivered before saying they’d pay to watch ads.

A recent study by LightShed Partners predicts that 40% of current Netflix subscribers will switch to the service’s forthcoming AVOD offering. LightShed estimates that this has the potential to raise $4 billion in ad revenue, based on current viewing times. The company looked at March 2021 and 1 year later, then converted Comscore’s CTV streaming-time-spent data into total CTV hours streamed for each major service. If these projections hold true, Netflix would become the second-largest ad- supported service after YouTube.

In July 2022, TipRanks, which supplies data to sell-side analysts and hedge fund managers, looked at streaming companies’ website traffic for June 2022 (including all subdomains) and noted how viewing increased year-over-year. Hulu came in first in the ranking, with 117.83% traffic growth. Discovery+ came in second, with 99.64% traffic growth; Peacock was third, with 97.38%; fuboTV was fourth, with 50.88%; and HBO Max came in fifth, with 44.11%. Netflix was nowhere to be found on this list, presumably because it has lost subs recently.

Now let’s look at ad-supported viewing. According to a study by Hub, Peacock has 73% ad-supported viewers, Paramount+ has 64%, Hulu has 58%, Discovery+ has 44%, and HBO Max has 28%. Doing napkin math, if we add up all of these percentages and then divide by the amount of services, the number pretty much jibes with an Insider Intelligence report that says AVOD viewers in the U.S. will include 58.2% of all OTT video customers by the end of 2022. However, trends are showing that not only will viewers watch ads, but they’ll even pay for subscriptions that have ads. While ad sales have slowed recently, the momentum that ad-supported viewing has demonstrated—both in subscriptions and free ad-supported streaming television (FAST) programming—makes it somewhat surprising that this business model is proving so compelling.

It remains to be seen whether adding an ad-supported option helps Netflix or whether viewers will pay to watch Netflix content with ads. We now know that, going forward, whatever you’re watching, more than half the time you’ll have some ads in the content. If viewers are paying for subscriptions as well, that’s even better if you’re a media company. Netflix’s venture into AVOD will be very interesting to watch.

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