SAN JOSE, Calif.--(BUSINESS WIRE)--Today TiVo, a wholly owned subsidiary of entertainment technology company Xperi Inc. (NYSE: XPER), found in its Q2 2024 Video Trends Report that consumers are pulling back on entertainment spending as the industry works to rebalance and bundle its current entertainment offerings.
In 2020, entertainment consumption and spending surged as the pandemic limited consumer activities outside of the home. Now the pendulum is swinging back as consumers are hit with ongoing economic headwinds and a steady cadence of out-of-home entertainment opportunities. While daily viewership hours haven’t noticeably dropped in the last year, the average total of entertainment spend is down $30 year-over-year, and the average total number of services used is back to 2022 levels, when much of America was beginning to gain relief from the pandemic — coming in at 9.1, a drop from 10.9 in 2023. This indicates that while consumers are cutting back on their spending, they haven’t stopped enjoying entertainment. Instead, they have found a way to supplement their favored pay TV and broadband services by turning to ad-supported services and pushing major media companies to bundle services or risk losing customers.
With this shift in viewership and spending, major media companies that have primarily focused on subscription video on demand (SVOD) services as their main customer attrition point in the past have now realized the power of providing customers with their ad-supported video on demand (AVOD) and free ad-supported streaming TV (FAST) services as a complimentary package or bundle to their SVOD service. Of those who use SVOD services in 2024, about 64% of respondents said they utilize the available ad-supported tiers, an increase of 16 percentage points from Q2 2023. Combined with the nearly 62% of respondents who stated that they were “likely” or “much more likely” to keep their broadband service if their provider bundled additional streaming services with internet, indicating that people are looking for ways to save. This new business model has proven successful for entertainment companies as FAST subscriptions are now finding their footing in the entertainment landscape, no longer being seen as a subscription downgrade but as a bonus.
Consumers are also leaning into this new business model with an increase in ad tolerance, proving that if service providers find the right balance of paid vs. ad-supported services, consumers are more than willing to watch ads if they believe they are receiving a better bang for their buck. Even tier one advertisers are finding this to be true as advertisement quality on FAST and AVOD services — something that has been low-quality in the past — is also improving, helping to make ad watching less of a bother for consumers.
“In the past, we've seen over-the-top (OTT) service providers trying to assess the limits of consumer entertainment spending, and they are now seeing where consumers are willing to draw the line,” said Scott Maddux, vice president of global content strategy and business at Xperi. “Now, the same OTT service providers are starting to see the promotional and monetary benefits of creating bundles with their subscription video on demand, ad-supported video on demand and free ad-supported television service options, helping to reduce churn and, more importantly, keep their customers under one roof rather than spread across multiple broadband and pay TV services, allowing content providers to monetize across the full spectrum from subscription to ad-supported.”
Additional TiVo Video Trend Report Highlights
- The discovery dilemma: Nearly 85% of respondents shared that they are prone to browsing before they land on a show or movie to watch, and almost 73% shared that they go into more than one app in a typical viewing session to settle on an entertainment option.
- Organic recommendation is best: The relevance of content recommendations has gone down across the board, with respondents still finding organic recommendations to be more relevant than other forms of recommendations. Top methods of discovery continue to be word-of-mouth/recommendations from friends (50%) and commercials or ads that run during other shows (40%).
- Social video usage shifts slightly: Almost 80% of respondents watch video via their social media and/or user-generated content networks; this is a slight decline from 85% in the spring of 2023. Top video sources include YouTube followed by TikTok.
- Amazon rules TVOD: The share of pay TV subscribers utilizing transactional video on demand (TVOD) services has declined substantially, from 54.3% in Q2 2023 down to 45.7% this year. Broadband-only subscribers’ TVOD usage has remained consistent, at 41.3%, compared to 41.9% in Q2 2023. Amazon Prime still leads as the top TVOD service with YouTube following in its footsteps.
Find more information from the latest Q2 2024 Video Trends Report here.
TiVo is also an expert in video trends and TV viewership data. TiVo TV Viewership Data includes second-by-second data captured from set-top-boxes within households across all 210 DMAs in the U.S. The data reflects both live and time-shifted viewership information which is the cornerstone of TiVo’s expertise in TV data processing. Find more information about TiVo’s Viewership Data here.
Methodology
Since 2012, TiVo has surveyed consumers to uncover key trends relevant to TV providers, digital publishers, advertisers, and consumer electronics manufacturers. The latest TiVo Video Trends Report surveyed 4,490 adults 18 and older living in the U.S. and Canada during the second quarter of 2024 (3,500 U.S., 990 Canada). In addition to identifying and analyzing key trends in viewing habits, the TiVo Video Trends Report provides insight to consumer opinions regarding Subscription Video on Demand (SVOD), Transactional Video on Demand (TVOD) and Advertising-Based Video on Demand (AVOD) providers, emerging technologies, connected devices, over-the-top (OTT) apps and content discovery features, including personalized recommendations and search.
About TiVo
TiVo brings entertainment together, making it easy to find, watch and enjoy. We serve up the best movies, shows and videos from across live TV, on-demand, streaming services and countless apps, helping people to watch on their terms. For studios, networks and advertisers, TiVo targets a passionate group of watchers to increase viewership and engagement across all screens. TiVo is a wholly-owned subsidiary of Xperi Inc. Go to tivo.com and enjoy watching.
About Xperi Inc.
Xperi invents, develops, and delivers technologies that enable extraordinary experiences. Xperi technologies, delivered via its brands (DTS®, HD Radio™, TiVo®), and by its startup, Perceive, are integrated into billions of consumer devices and media platforms worldwide, powering smart devices, connected cars and entertainment experiences, including IMAX® Enhanced, a certification and licensing program operated by IMAX Corporation and DTS, Inc. Xperi has created a unified ecosystem that reaches highly engaged consumers, driving increased value for partners, customers and consumers.
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SOURCE: Xperi, Inc.
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