The era of “peak TV” is ending, and providers face substantial headwinds which may constrain subscriber growth. Hub Entertainment Research’s annual “Monetization of Video” survey indicates most consumers are now either at or near their maximum number of TV sources, and are not actively looking to spend more money on video entertainment.
According to Hub, consumers are reaching their limit for video sources. In fact, nearly half of those surveyed are already at what they claim is their maximum, averaging seven TV sources. And among the one third of viewers who have not yet reached their limit, seven is also the optimal number of services.
The good news for providers is consumers are still spending more. Nearly half of consumers (44%) say they are spending more on TV than a year ago, and that is up from 34% who said the same in 2020. This is despite the fact their actual average spend of US$85 per month is 25% more than what they consider “reasonable” for video services.
However, the bad news is the highest spenders are the most likely to churn: the more subscriptions a household has, the more likely they are to cancel a new subscription within six months of acquiring it. The majority of those with four or more subscriptions say they canceled a new service within six months.
Hub assures consumers are looking for value. While low price is the strongest driver of the value of a particular video service, it is not the only thing consumers include when considering value. They also want price stability, and for a service to have a large library of content.
Bundling SVODs with MVPD subscriptions provides value, Hub notes. Among the substantial segment of consumers who do not have an MVPD subscription, two thirds say integrating SVOD platforms into an MVPD (for instance, traditional pay TV) set-top-box would make a pay TV service more valuable to them (up from 59% last year). In an environment characterized by subscription churn, such bundles could serve to reduce cancellations.
“The video ecosystem is clearly at an inflection point. Gone are the days when providers could reliably count on revenue growth from new subscribers. This leads to a quandary: how to deliver the volume of content necessary to keep subscribers loyal, while at the same time controlling production costs. Reconciling this dilemma will be the key to long term success in the video marketplace,” said Mark Loughney, Senior Consultant to Hub.
These findings are from Hub’s 2023 “Monetization of Video” report, based on a survey conducted among 1.602 US consumers with broadband, age 16-74, who watch at least one hour of TV per week. Interviews were conducted in June 2023 and explored consumers’ attitudes toward what they pay for TV services, and the value delivered by providers.