The number of video services consumers are tapping to fill their entertainment needs continues to climb, and while price remains an important factor, a bigger pain point for users is content discovery amid a seemingly ever-growing array of options, according to TiVo’s Q4 Video Trends report.
The average number of video sources consumers use reached nearly 12 (TiVo’s official number is 11.6) in Q4 2022 – up from the average of about nine a year ago. Perhaps unsurprisingly, income is directly correlated with how many sources users are tapping, with households earning over $200,000 using an average of 21.1 sources, versus less than 10 services for those earning $80,000 or less.
And as the number of services climb, so too has the share of non-paid services with AVOD and FAST platforms continuing to capture a greater share of the market. The share of number of non-paid services used in Q4 was up 69% over Q4 2021, while share of paid services used climbed 16%.
Although users are turning to free options, consumers still appear willing to pay for video services – with overall average spending on video services each month increasing almost $20 since last year to just under $190 per month. Despite increases, around 31% of respondents claim recent economic inflation is causing them to cut their overall entertainment spending, but a whopping 84.8% said they have no plans to reduce entertainment spending or don’t know when they will.
The discovery challenge
When it comes to pain points, respondents cited “discovery” – meaning the ability to find new and relevant video content – as a bigger issue than the overall cost of their video services.
According to TiVo, the top ways consumers are finding out about new TV shows or movies continues to be through commercials or ads that run during other shows (47.9%) and by word of mouth or from friends (46.5%), although both methods saw low single digit declines in Q4.
Two categories that saw the highest growth in the period were display ads on the home screen of video services, which ticked up nearly 5% as a way for users to discover content, as well as in-stream advertising on video services, which climbed 3.2%.
“In-stream and display advertising via online video sources are becoming increasingly important methods for content discovery. But in general, the mix by which consumers are discovering content has never been more varied,” wrote TiVo.
Most streaming services offer content recommendation engines, but they appear to only be hitting the mark with roughly half of consumers. Per the TiVo report, 55.9% of consumers said they’re happy with content recommendations, while 35.4% are indifferent, and 8.7% are unhappy.
“A majority of respondents also noted having too many services in their bundle and that the rate of change at which content jumps in and out of their purview is outright damaging to their overall viewing experience,” TiVo stated in the report. “That being said, until platforms within the ecosystem can reach a balance between the growth of available content and the adoption of video technology(s) that help to effectively navigate the overwhelming sea of options, consumers will continue to pay the price.”
In an effort to help consumers navigate a sea of content choices some streaming platforms have tried editorial approaches, such as Roku’s 15-minute weekly series “Roku Recommends”, for example. The second season of the show debuted last year and aims to influence viewers’ choice on what to watch and help discovery (as well benefit marketers) on the platform, leaning on both human-generated and Roku data-driven recommendations. According to Roku, those that watched season one of “Roku Recommends” were 188% more likely to search for a title or series highlighted in an episode compared to those that didn’t see the show.
AVOD/FAST see share of view time climb
TiVo also found that the average daily time spent watching TV held fairly steady since last year at around 4.4 hours, although the share of TV time spent on various mediums has fluctuated some – with only free streaming platforms and vMVPDs increasing their respective share year over year.
In addition to increasing the number of services used AVOD and FAST also saw their share of TV time bump up. In Q4 AVOD, FAST and social video accounted for 23.5% of daily time spent on video services – up from the category’s just 10.3% share in Q4 2021. Virtual MVPD’s share also increased slightly in Q4 to 8.1%, up from 7.8% a year prior. Traditional pay TV services still nabbed the largest share at 32.1%, although dropped about six percentage points from the year prior. SVOD, meanwhile continued to hold steady at about 30% of time spent watching, down slightly from 31.4% a year ago.
Notably, local content accounts for nearly a quarter of viewing time, with traditional pay TV still the dominate source (49.6%) users are turning to for local content. Still, Q4 marked the first time ever that fewer than half of all respondents cited pay TV as their main way of watching local content. Virtual MVPDs, which typically offer a skinnier lineup more akin to cable, came in as the second top source for local content, with 18.6% citing it as their primary source . That was followed by free OTA broadcast (10.4%), social media apps (7.7%), and free ad-supported streaming services (6.4%).