Streaming By the Numbers: Subscribers Want Value and Don’t Mind Ads

Despite reports of volatility in the news, streaming video is having a great summer and a solid year all around.

According to the PwC Global Entertainment & Media Outlook report for 2023-2027, the United States is still the top region in the streaming market, with revenue of $49.4 billion and growing. By 2027, the US market is predicted to nearly double that total ($75.5 billion), while the second place slot will be China at a distant $25.9 billion.

In fact, the entire global streaming media industry is posited to hit $2.9 trillion dollars total in just four years. What could throw some sand on this fire, however, is a fickle, changeable subscriber base looking for more value and lower prices.

Summer 2023 is the Season of Streaming

When it comes to the summer of 2023 specifically, viewers are a little more fickle. The latest Nielsen data shows that TV usage is up 0.2% between June and July, with the younger generations (those under 18 years old) increasing by four full points. On the flipside, however, viewing by adults (over 18) fell by 0.3%.

Not exactly a breathtaking drop, and both these numbers are likely due to it simply being summer. Adults are more likely to be out going to concerts, parties, and other outdoor events while kids have more free time from school and are spending some of it catching up on TV.

Overall, however, that same Nielsen report shows that streaming in July of 2023 nabbed a record at 38.7% share of TV usage.

All streaming services are killing it, but Netflix, Disney+, and Paramount+ deserve special mention. The Nielsen report for July shows that Amazon Prime Video, YouTube, and Netflix reached all-time viewing highs for general viewing. However, when you look at the top ten most-streamed shows of the last six weeks, you see an interesting pattern:

1. Suits (Netflix/Peacock)
2. Sweet Magnolias (Netflix)
3. Bluey (Disney+)
4. The Witcher (Netflix)
5. NCIS (Netflix/Paramount+)
6. Grey’s Anatomy (Netflix)
7. They Cloned Tyroned (Netflix)
8. Transformers Rise of the Beasts (Paramount+)
9. SWAT (Hulu/Netflix/Paramount+)
10. Cocomelon (Netflix)

Suits is the clear winner this season: the July Nielsen report shows that Suits smashed records with 18 billion total viewing minutes.

However, when you look at the full list, you see Netflix and Paramount+ show up more than any other streaming service. Even Disney+ only nabbed one slot on the top ten, despite their explosion of high-profile content.

Though Australia is a smaller market, it’s interesting to see that Paramount+ showed the strongest growth of all streaming services there: a 41% uptick in subscribers.

Millennials and Gen Z Are Churn-Happy But Open to Value

So streamers are doing great, right? Well, yes, but not everyone is surfing a unicorn down a rainbow wave. It turns out that while people are watching more TV (and streaming) this year than ever before, subscribers will drop a service at the drop of a hat.

They are apt, however, to pick it up again.

Streaming video churn is popular. Fully one-fourth of consumers in the United States have dropped a streaming service in the past year. However, they’ve also resubscribed to the exact same service in the same twelve months.

That same report shows that Millennials were the most likely to rotate their subscriptions, and had the highest numbers in both likelihood of dropping a service and picking it back up again.  Gen Z came in second place, with Gen X as a close third.

Price and perceived value are issues, especially for the younger generations. Gen Z reported as being the most sensitive to price and price changes, and were more likely to drop for that reason.

What might prevent them from churning is seeing more value in the service. In that same Deloitte study, 34% of respondents said they’d keep a subscription if it came with a loyalty program. 37% said that if first-run movies were available on the service without additional charge, they wouldn’t cancel.

When it comes to Millennials and Gen Z, over half said they’d keep a streaming video service that came packaged with a music or gaming service.

Viewers Will Stay for Ads and a Lower Price

One of the most effective ways for streamers to keep customers is, surprisingly, one that people have been railing against: ad-supported models. We know, we’re shocked too.

Everything is becoming more expensive, and streaming is no exception. Bob Iger announced Disney+ and Hulu’s prices would jump up nearly 30%. Peacock’s price jumped up by a couple bucks, as did many streaming services.

What’s interesting, however, is that these price hikes have made viewers more amenable to lower-cost, ad-supported tiers.

In that same announcement, Bob Iger claimed around 40% of their new subs were picking the ad-supported model. According to the Hollywood Reporter, their source a Netflix told them the ad-based tier at Netflix jumped from 5 million subscribers to 10 million since May.

Not only are viewers willing to watch more ads, apparently it makes more money for the companies. That same Hollywood Reported article linked above claimed that the executives they spoke to at every streaming platform claimed revenue per user increased at the ad-supported tier.

Prices and the crackdown in password sharing are making ad-supported tiers more popular. Netflix reported that of the 2.6 million US subscribers it added in July of 2023, 23% chose the $7 tier that includes ads.

A global Deloitte survey backs this idea up. When they asked five countries (US, Brazil, UK, Germany, and Japan) how they feel about ad-supported tiers for video streaming on demand, the most popular answer on average was that they are happy to watch ads for a lower subscription cost.

Only the US bucked the trend, showing a preference for no ads but a willingness to experiment. The most popular choice for Americans (41%) was a no-ad model with a monthly fee of $12. The second most popular (34%) was a theoretical model of no monthly fee with 12 minutes of ads per hour of content. Basically, how standard network TV works.

The third most popular in the US (25%) was a model of six minutes of ads per hour with a small subscription fee of around $6.

Consumers Tuning into Value

As you can see, streaming video is in for an exciting few years. While customers are watching more streaming than ever, they’re also happy to drop or pick up subscriptions at will to catch their favorite shows and save a little money.

Streaming brands looking to keep their subscribers year-round would do well to add value, packaging their services with other forms of streaming media and pulling down exclusive first-run movies.

Additionally, streamers who offer low-price ad-supported alternatives could keep the more skittish, younger generations from bolting at the first sign of a price hike.

For more insights on streaming marketing, or just to talk about Suits, reach out to our team today.