Have we entered the new age of ‘Good Enough’ TV? – Industry Voices: Grebb

Industry Voices Michael Grebb

As cord cutting continues to accelerate, consumers are watching more video than ever on new streaming platforms. Even a dual Hollywood strike of writers and actors hasn’t dampened viewing options as we work our way through the flood of content released over the last three or four years.

But the bigger question is whether we’ve reached a breaking point that forces consumers to reassess their entertainment spending. The old days of cutting the cord to save money are over. Anyone who wants the well-rounded entertainment experience of traditional pay TV can now expect to pay as much or more for streaming. We all knew this would happen, by the way. It was only a matter of time. 

Media companies have underpriced SVOD for years to drive subscriptions and please Wall Street, which decided in early 2022 to suddenly care more about profitability and ARPU than sub numbers. Under this new reality, high-quality subscribers who don’t churn out are more valuable than ever. As a result, major streamers can worry less about raising prices as they chase consumers willing to pay a few extra bucks a month. Others can downgrade to the cheaper ad tiers, which enable higher ARPU anyway. 

Disney just raised the price of both Disney+ and Hulu by $3 per month. In June, Paramount Global hiked Paramount+’s Essential and Premium tiers by $1 and $2 per month, respectively, and Lionsgate’s Starz raised prices by $1 per month. In April, Warner Bros. Discovery stripped 4K capability from its top plan and ported it onto a new, more expensive $20-per-month premium tier; now it’s reportedly cooking up a live sports tier that will coincide with the MLB playoffs and extract even more money out of subs. Apple TV+ hiked prices by 40% to $7 per month back in October. Virtual MVPDs, meanwhile, are approaching price parity with cable and satellite expanded basic, as YouTube TV raised prices more than 12% in April to $73 per month. Fubo raised prices $5 per month in February. Even smaller players are jumping on board: CuriosityStream recently hiked its monthly plan by 40% and doubled the price of its annual package.

These hikes are the industry’s hangover medicine following its pandemic-fueled content spending bender. But consumers who typically juggle numerous services are starting to notice how much these bills add up. The average number of streaming services per consumer has declined from 7.4 in 2022 to 6.4 in 2023, according to a recent survey by Hub Entertainment Research. Of course, it’s not that people are watching less TV. Quite the contrary, they are watching more than ever. But ever-increasing prices have many fleeing to free, ad-supported options such as AVOD/FAST channels. 

This earnings season, several companies reported rising viewership across free platforms: Roku saw active accounts balloon 16% year-over-year to 73.5 million as streaming hours increased by 21% YOY to 25.1 billion. Similarly, Vizio reported active accounts up 10% to 17.6 million, with hours spent on its SmartCast UI (including its WatchFree+ FAST platform) up 16%. Fox’s “total viewing time” metric for its AVOD/FAST service Tubi rocketed by 65% YOY, with people able to access roughly 60,000 movie and TV titles amounting to 200,000 hours of free stuff. That’s insane. And any cost-conscious consumer might be crazy not to rely mostly (or completely) on free streaming content. 

Of course, non-buyer beware. Many FAST channels offer a subpar consumer experience when compared to paid SVOD and AVOD alternatives, with our StreamTRAK video intelligence service still detecting considerable unfilled time amounting to “We’ll be right back” or even blank screens lasting 10 minutes or more. Our audits from January to June 2023 found that unfilled time averaged 3.9 minutes per hour, although that’s down slightly from 4.2 minutes per hour from July to December 2022.

But things can vary wildly.

In the first half of 2023, one provider’s FAST channels only averaged 36 seconds per hour of unfilled time vs. 8.2 minutes for one of its peers. And while unfilled time isn’t a problem on free AVOD, those tend to devote more minutes per hour to ads than their paid counterparts - although StreamTRAK data shows those numbers declining significantly in 2023 (Crackle has gone from averaging 9.7 minutes of ads per hour in July-December 2022 to only 3.5 minutes from January to July 2023). 

Free AVOD/FAST channels often also feature old IP vs. the newer premium fare available through paid options. But consumers crunched by inflation, economic uncertainty, and streaming price hikes may be content to settle for reruns of “The A Team” rather than pay for the latest season of “Star Trek: Strange New Worlds.” And as illustrated above, the FAST experience is improving, albeit very slowly. As media companies struggle to please Wall Street’s hunger for higher ARPU by raising prices and pushing consumers to ad-loaded and sometimes less robust experiences, many consumers may declare free options “good enough.”

Not everyone needs to watch new seasons right away or catch that movie in its first post-theatrical window. Welcome to the Good Enough Age. For the rest of us, prepare to pay up.

Michael Grebb is Vice President and Lead Analyst for One Touch Intelligence, which provides market intelligence and industry analysis services for leading companies in the media and telecommunications space. The One Touch Intelligence STREAMTRAK series is a complimentary service offering industry professionals insights and context around developments in the digital media sphere.

Industry Voices are opinion columns written by outside contributors — often industry experts or analysts — who are invited to the conversation by StreamTV Insider staff. They do not necessarily represent the opinions of StreamTV Insider.