• by Karlene Lukovitz  @KLmarketdaily, December 22, 2023

It’s complicated. Yes, that’s become a catchphrase, but it does sum up the ambivalent attitudes about streaming services being expressed by both advertisers and consumers as the business goes through a painful transition period and we barrel toward a new year.

On one hand, survey after survey, and forecast after forecast, show advertisers and agencies planning greater investment in connected TV.

Witness the 22% hike in CTV spend in 2024 alone projected by Intelligence Insider/eMarketer, noted here last week.

Or the just-released 2024 U.S. Industry Pulse survey from Integral Ad Science/IAS and YouGov, which found 84% of digital executives involved with programmatic advertising agreeing that the shift in ad spend from linear to CTV will accelerate in 2024, and 79% agreeing that the shift in spend from programmatic display to programmatic video/CTV will accelerate.

Clearly, there’s genuine enthusiasm about developments that should make it easier to tap CTV’s potential, including expansion of programmatic and other buying options, and progress on scale and performance metrics.

On the other hand, the buy side remains less than enthused about CTV’s cost, the lingering lack of measurement standardization, ad-frequency overload, and ad-fraud and viewability rates.

The Pulse survey found 84% agreeing that CTV ads are vulnerable to particularly low rates of viewability, 80% agreeing that CPMs for CTV will be a barrier to investment, and 78% agreeing that supply and scale will be a major challenge for advertisers.

In addition, 75% agreed that ad fraud will be a greater concern as the volume of CTV inventory increases, and 73% that brand risk will be a greater concern.

Granted, IAS is focused on managing ad fraud, viewability and brand risk issues. But this is by no means the only survey indicating the same concerns. It’s just the most recent.

On the consumer side, the plethora of research on streaming attitudes and behaviors is sometimes contradictory — even within a given survey — probably reflecting viewers’ own confusion and ambivalence, as well as differences in methodology.

Yes, consumers have noticed the flood of streaming service and vMVPD price hikes, and some are canceling services in response. Most of the surveys I’ve seen in recent months report about 20% to 30% of streaming subscribers saying they intend to cancel at least one service in the months ahead.

For example, a survey of more than 3,000 U.S. adults by DISQO found 21% planning to decrease their streaming services in 2024, 58% planning to keep the status quo, and 21% planning to add services.

But a KPMG survey among 1,300 U.S. adults produced less positive results, with 38% saying they’ve cancelled at least one service due to price increases (37% within the past six months), and 27% saying they plan to cancel one in the next six months.

Reports of having cancelled at least one service due to price increases within no specified time period were more prevalent among Millennials and Gen Zs (46% and 39%, versus 35% and 28% for Gen X-ers and boomers).

Another 10% said price hikes aren’t relevant because they routinely unsubscribe and re-subscribe based on what they’re interested in watching. And 5% said they make a practice of managing monthly streaming costs by unsubscribing and re-subscribing.

Only about a quarter (27%) said they’ve noted the hikes but have just kept paying for their existing subscriptions, and only 14% said they didn’t notice them.

On the upside for the streaming industry — which is enjoying higher margins on ad-supported plans than no-ads plans — many consumers are indeed acquiescing to options like ad-supported plans instead of canceling services.

In KPMG’s survey, 30% reported already paying for an ad-supported subscription; 23% said they would consider switching to one in the next six months because it’s worth sitting through ads to get a lower price; 22% said they don’t want to watch ads but may be forced to due to cost; 14% said they would only watch ads on a free service, and 11% said they’d rather cut costs elsewhere than have to watch ads on streaming services.

Another recent survey, conducted among 1,000 U.S adults by Dynata for Amdocs, found a third of consumers overall opposed to seeing more ads in streaming services, but nearly half —particularly younger demos — saying they are open to it.

But value for price, rather than price alone, is the key consumer dynamic, according to this research.

Fully 45% of respondents agreed that rising subscription costs haven’t resulted in a better streaming experience, and 40% said that higher prices haven’t delivered more access to quality content.

Asked what makes them stay with a service, quality of content was the top factor (48%), with just 21% citing cost (down from 38% in 2020).

Similarly, asked what makes a streaming subscription worth the investment, 66% cited original content, 56% cited a continual flow of new content, 52% cited access to older movies and TV shows, and 50% the ability to stream on a variety of devices.

And nearly half cited “ad-free streaming.”  

With streaming services hiking prices and preparing to test or implement a variety of options designed to improve their own bottom lines, consumers, knowing they are not really in the driver’s seat (despite media companies’ protestations to the contrary), seem willing to make concessions beyond advertising to avoid even higher costs.  

All of which is making streaming look increasingly like the old cable and satellite packages they have been fleeing.

Media companies were no doubt gratified that KPMG found 81% of consumers — the same ones who have been free to cancel and re-up streaming services at will up to this point — saying that they would be willing to accept long-term streaming contracts for a lower price. (Take that, churn rates!)

Content/services aggregation may also turn out to be a mixed proposition.

Practically every study has confirmed that consumers are frustrated by the difficulties of finding content and managing multiple subscriptions and apps. In the Amdocs survey, 42% said it would be “nice” to have a single portal or app where all streaming subs and related content could be accessed, and 40% described this as “very desirable.”

“Viewers are excited about the volume of content to choose from.  Their biggest problem now is figuring out how to use it all,” Hub Entertainment Research principal Jon Giegengack recently summed up.

Well, it certainly looks like they’re in luck, because the big players are all talking bundles, mergers or both. 

One of several media and entertainment executives recently interviewed (anonymously) about the 2024 outlook by CNBC’s Alex Sherman predicted that companies will “finally get serious” about bundling. And specifically, that Disney will agree to bundle Disney+, Hulu and ESPN+ with Max and Netflix to offer a selection of streamers that “rivals cable TV.” Supposedly “at a discount."

Another unnamed exec observed that Amazon or another “anchor distributor" might need to be brought in to pull off a discounted bundle, and predicted that Paramount+ and Warner Bros. Discovery’s Max will be part of the first streaming bundle offered by Amazon. (This before the news of Paramount/WBD merger talks broke.)

But at a discount compared to what? Cable packages that go for anywhere between $80 and $300 per month? Or a discount compared to what it would cost to pay for multiple, no-ads premium services separately? And for how long will such “discounts” last?

Here's the likely answer to that last question: In a Hub Entertainment survey, 59% of U.S. adults said they would be willing to pay more — that is, beyond the cost of subscriptions themselves — for a “one-stop shop” app that lets them manage, use and pay for all their subs in one place. But should they really have to?

As entertainment providers charge ahead with their determination to make streaming profitable within the next year, perhaps they should give at least passing notice to a couple of points.

One is that the Amdocs survey confirmed unambiguously that consumers expect improved experiences to accompany higher costs.

The other is that nearly half reported encountering connectivity issues while streaming movies and TV shows during the past year.

If the industry is going to recreate the cable model with streaming, maybe it should at least figure out how to replicate cable’s more or less consistent reliability? And fix the repetitive ads problem? And maybe consider not pumping up the ad loads as much as possible in as short a timeframe as possible? Or turning every TV show into an opportunity for non-stop “branded content” and ecommerce integrations and “fun” interactive advertising games?