As streaming providers struggle to adapt to reduced consumer demand for new streaming subscriptions, that slack is being taken up by ad-supported versions of popular streaming services as well as FAST (free ad-supported TV) channels.
That’s according to a new quarterly viewing report from TiVo released this week, which showed that the average number of streaming services used by consumers decreased from 11.6 at the end of 2022 to 10.9 in by the end of June 2023, followed by a decrease in consumer spending from an average of $189 a month to $170 over the last six months. While consumers are undoubtedly reconsidering their spending habits, this change has shown growth in consumer video consumption; the report saw a jump from 4.4 hours a day in video consumption in Q4 2022 to 4.7 hours per day.
When looking at how respondents spent their time watching video, the report found that ad-supported video on demand (AVOD) and free ad-supported streaming TV (FAST) consumption increased considerably from Q4 2022.
This increase in AVOD/FAST is a reflection of consumer budget constraints and major subscription video on demand (SVOD) companies offering lower-cost services that generate higher ad revenue, TiVo said. This new SVOD/AVOD hybrid structure allows users to consolidate their subscriptions, cut costs and still watch the same or more amount of content. With less disposable income available among consumers, the demand for flexibility in entertainment choices has surged in response to the evolving preferences in entertainment over the recent years, according to the company.
TiVo also offered a caveat, however:s entertainment consumption rises, content discovery continues to be a pain point for many consumers. When trying to select a movie or show, 82% of consumers are prone to browsing before making a final selection—with over 60% using multiple apps in their pursuit.
“Consumers know what they want in a video service and are adjusting their entertainment habits to fit their needs—whether that be cancelling their SVOD subscriptions or reviving their cable,” said Scott Maddux, VP of global content strategy and business at TiVo parent company Xperi. “As we continue to see this shift in consumer behavior it’s essential that entertainment providers focus on solving consumer content discovery issues to help consumers who are juggling their entertainment needs get back to what’s important, enjoying entertainment."
