Nielsen’s inaugural “State of Play” report released recently[i] takes a closer look at the evolving media consumption trends focusing on streaming video. While this report focuses on the US market, the findings reflect the broader trends sweeping our world. The sheer scale of choice available to consumers today is extraordinary. The list of unique program titles in the U.S. alone topped 817,000 this February and continues to grow, much like the array of streaming platforms and apps that deliver many of those titles. The explosion in OTT media has been matched with a slew of new OTT launches by traditional linear television players.
The explosion in choice has been met with equal strides in connectivity. According to the report, more than 81% of U.S. homes had at least one TV-connected device, up from 72% in 2019. That connectivity, combined with the hundreds of direct-to-consumer options that offer every conceivable content genre from big-budget movies to adventure to sports programming, has transformed consumers’ use of televisions. Late last year, consumers in the US spent 32% of their total TV time with TV-connected devices (68% with traditional TV). Among kids aged two to seventeen, the percentage was a whopping 64%.
Consumers haven’t had as much choice
Linear television and cable tv have ruled the American market until recently. The tide seems to be turning towards OTT though. In 2021, American consumers watched nearly 15 million years’ worth of streaming content. In February of this year, content from streaming platforms accounted for nearly 29% of consumers’ total time with TV, ahead of broadcast programming (26.4%) for the fourth straight month. Broadcast programming has been popular with the baby boomers, especially in the news and live sports. Streaming video will surpass broadcast television in the US by 2026[ii], according to Statista.
OTT services vie for baby boomers
With an increasing number of OTT providers signing up for live sports telecasts, it is clear that baby boomers are a vital demographic. In the latest example, YouTube followed other OTT providers to sign-up with Major League Baseball.[iii] YouTube and Major League Baseball have renewed their streaming pact for the 2022 season, which will result in fifteen regular-season games being shown exclusively on the platform. Apple TV+, Amazon Prime, and Peacock also have broadcasting agreements with Major League Baseball. Thus far, the baby boomers have resisted the streaming video tide according to eMarketer[iv]. Among those ages 55 and older, 38% spend more time watching content on cable than on any other platform, compared with 21% of Gen Xers, 16% of millennials, and just 9% of Gen Z adults. Still, even boomers prefer streaming to cable, with 40% spending most of their video viewing time with those digital services.
As the budgets for original television and movie content increase at streaming studios, and streaming video becomes the norm, MLB deals may be a good way for streaming providers to evaluate the live sports genre beyond the US.
Higher churn remains a concern
The explosion in the choice of streaming content for consumers has also meant that the risk for higher churn remains high. As many consumers become overwhelmed with the number of services on offer and the increasing cost of subscriptions, many may resort to cancellations or switch to lower-cost ad-supported services. Higher SVOD adoption in the US has meant that it has one of the highest churn rates at 35%, according to Deloitte[v]. With streaming providers set to spend a record amount developing new content, the $140 billion spend may not be sustainable. Just why we are likely to see more providers offer cheaper ad-supported services.
Shifting content strategy to meet consumers halfway
46% of consumers found it hard to find the content they want to watch, according to the Nielsen report. The struggle to find content is real, and the complexities are increasing as media companies seek to optimize consumer experiences. A notable example is how NBCUniversal leveraged its various consumer endpoints, including Peacock, for the 2021 Summer Olympic Games in Tokyo and the 2022 Winter Olympic Games in Beijing. When consumer feedback indicated that the streaming experience during the 2021 Summer Olympics was confusing, NBCUniversal changed its tactics. The revised streaming strategy dramatically simplified consumers’ ability to find the content they wanted during the 2022 Winter Olympics.
Bundling away the streaming pain
The overwhelming content choice has many wishing for streaming content bundles. According to the report, 64% have hopes for streaming bundles or services that could help consumers manage multiple subscriptions conveniently. Mobile carriers have a unique opportunity to offer subscription marketplaces or aggregation services that offer various OTT subscriptions via a unified interface. Making sign-ups and subscription payments more convenient as a feature can make such services an instant hit with consumers. Verizon has started Stream TV to solve subscription fatigue. [vi] Other carriers in the US and elsewhere will latch onto this new revenue opportunity.