New platforms, ad-supported tiers, FAST channels… the OTT landscape is becoming more complex and users are shifting accordingly. Which models are prevailing? Have consumers reached their peak when it comes to subscriptions?
As streamers explore their business models and experiment with their offers, the OTT landscape continues to evolve. The scenario has become more complex recently, as platforms have added ad-supported tiers, raised their fees, and consolidated corporate services.
In addition, perks such as password sharing or content exclusivity are starting to be eroded, in addition to increased competition for SVODs as seemingly every media company and TV manufacturer has brought forth a FAST.
On top of this, there’s the economic factors at play, as inflation and worries about the economy continue to bother consumers.
So, in this notably complicated scenario, how do platforms stand in the eyes of today’s consumers? Are they saturated and have we reached the so called “peak TV” subscriptions?
A new report from Hub Research titled Monetization of Video indicates that almost half (43%) of US consumers say they already have as many subscriptions as they can use. The rest are either below their maximum, or they don’t have a maximum number in mind
Those already at their limit are using more than 7 different TV sources, somewhat more than viewers who say they don’t have a maximum number in mind. The 35% who say they have a limit but haven’t yet reached it say they would top out 7 platforms.
In addition, 44% of viewers say they are spending more on TV than they were a year ago, compared with only 35% in 2020.
The FAST Revolution and Ad-Supported Tiers
While a couple of years ago, FAST channels were considered to be a complement or an added perk to traditional TV platforms, the industry has now become a go-to when it comes to finding entertainment, as more and more groups are launching their own FAST channels.
According to the report, about 40% of Tubi or Pluto users give them the highest value rating. No doubt the fact they’re free helps, but growing investment in FAST content and user experience will continue to move the needle as well.
Yet, ad-based options to existing services are not always all that valuable for consumers. With tiered plans, each user “opts in” to the experience they receive: no one has to compromise. Therefore, while some platforms are perceived as more valuable than others, the ad-free and ad-supported versions of each one perform about the same.
The problem with churn
In this context of multiple platforms, “revolving door” churn is now the norm. Almost half of viewers say they have signed up for a new platform and then dropped it shortly thereafter. 42% have canceled at least one TV subscription within 6 months of signing up.
This churn is even more common among key segments. As well over half of Gen Z viewers and those with kids have cancelled a subscription within 6 months of signing up.
In addition, the highest spending viewers are more likely to engage in short term churn. The more paid TV subscriptions you have, the more likely you are to sign up for a new one and then cancel shortly thereafter.
