US consumer spending on subscription streaming rose to US$7.9 billion in the fourth quarter of 2022, with growth slowing slightly to 15.4%. Spending on subscription streaming for the full year was US$30 billion, an increase of more than 17%, according to new data from The Digital Entertainment Group.
In parallel, ad-supported premium AVOD and FAST content reached an estimated advertising revenue of US$16.8 billion in 2022, according to estimates from Omdia, as more major streamers diversified their offerings to include lower cost subscription plans with ads. Omdia estimates show ad revenue grew by more than 40% for the full year.
The report also notes that overall US consumer spending across digital and physical home entertainment formats in 2022 was more than US$36.5 billion, an 11.4% increase from the almost US$33 billion consumers spent in 2021, driven by a raft of strong franchise properties coming from theaters and television.
At the same time, consumers spent US$34.5 billion on digital entertainment purchases, rentals and subscriptions for the full year, a jump of 14% over full year 2021. Moreover, in the year’s final quarter, overall consumer spending rose 8.3%, representing just over US$9.5 billion, even though box-office spending on the titles released to the home in the fourth quarter fell almost 25% from the year earlier period.
● THE TREND LEANS TOWARDS STREAMING
According to new research from Aluma, if a show is available simultaneously on both a subscription video on-demand streaming service and a live TV channel, adult SVOD buyers are more than twice as likely to watch it on a paid streaming service than on a regular live TV channel.
When age is isolated, the variances are even more striking: the younger the adult, the more likely they are to prefer to view a new show on an SVOD service versus a traditional TV channel. Only 28% of SVOD buyers ages 65 and older prefer to watch a new show via subscription streaming, one-fourth less than prefer to watch it on a live TV channel (37%).
By contrast, SVOD buyers ages 55-64 are 1.4 times more likely to prefer a paid streaming service over a live TV channel, a rate that increases as age declines. Those 18-24 years of age are 5.3 times more likely to prefer SVOD over live TV channels when viewing a new show.
“The only age cohort that prefers watching new shows on live TV channels versus SVOD is age 65 and older. That is telling,” noted Michael Greeson, Founder and Chief Analyst at Aluma. “All others prefer streaming over linear, even the 55-64 segment. This segment is primarily comprised of Late Boomers who were middle-aged adults when Netflix launched in 2007, yet they too prefer the SVOD experience over live TV,” he added.
The reasons why five of the six age cohorts prefer to watch shows on subscription streaming services instead of live TV channels are because they have less advertising, they can watch shows at their convenience versus when scheduled, it is where they watch shows most of the time, and it is easier to find interesting content to watch. While older generations of buyers placed more weight than other cohorts on SVOD having less advertising, younger buyers were more likely to emphasize that subscription streaming is where they watch most shows and that it is easier to search and find interesting content to watch.
“When networks consider where to debut programming to best reach younger adults, an SVOD-first strategy will work best. For new shows that traverse both older and younger adult audiences, concomitant windowing, though difficult to negotiate, may be optimal,” Greeson concluded.