nScreenMedia OTT multiscreen media analysis

SVOD viewers willing to give up a lot to save a little

US consumer pay tv proclivities

One of the most cherished features of the major SVOD services is the fact that there are no ads to disturb the experience. However, according to new Deloitte data 3 in 5 SVOD users would be willing to watch ads to save a little money.

The Deloitte data shows that 43% of U.S. consumers now have at least one streaming video service. Of those, the vast majority cited convenience as an important feature. 74% agreed that SVOD allowed them to watch when they wanted, and 66% said it allowed them to watch wherever they wanted. Though millennials are most often cited as the mobile media generation, it was the generation Xers (32-48 year olds) that rated mobility the highest. 74% said they agreed with the statement that it let them watch wherever they wanted, versus 63% for leading and 55% for lagging millennials (14-31 year olds.)

Interestingly, 71% said they valued the fact that SVOD allowed them to watch ad-free. However, Deloitte says that 62% would be willing to watch ads to cut the cost of the service. Given that most are paying $10 or less a month for their SVOD service, it’s surprising that so many would give up something they obviously value so much to save so little!

Willingness to watch ads in SVODEven more surprising is that it looks like bingers, those watching 3 or more TV show episodes back-to-back, are more likely to be willing to cut costs by watching ads than non-bingers. 66% of GenXers said they liked the idea of saving money by watching ads, but within that age group 69% of bingers said this versus 57% of non-bingers. Binging indicates a viewer has a much higher level of engagement with a show than other viewers. It seems odd they would be willing to accept interruptions to the experience from ads.

Deloitte has more good news for advertisers. 73% of U.S. consumers participating in Deloitte’s survey said they tended to multitask on another device more during TV ads than during digital (online) ads.

This seems to indicate that the approach taken by Mike Hopkins, CEO of Hulu, could be a winner for both consumers and advertisers. Hulu Plus asks viewers to watch a modest (by broadcast TV standards) ad load, but is a dollar a month cheaper than Netflix and $7 a month cheaper than HBO Now. Deloitte data suggests that Hulu ad engagement is higher than TV, and this should give ad values a lift making up for the lower subscription cost.

Unfortunately, for pay TV operators there was little to cheer for in Deloitte’s data. The number of folks saying they had no plans to change provider or cut the cord fell 5% from 2013, to 62%. Meanwhile, those saying they are considering cutting the cord inched up a percent to 7%, as did those considering changing provider. 3% said they had cut the cord in 2014, the same as in the previous two years, and 13% said they hadn’t had pay TV for more than year. Among the millennials, cord cutting is much higher, with 25% saying they have cancelled pay TV.

Why it matters

Consumers say that one of the main benefits of using SVOD services like Netflix and Amazon is to watch ad free.

Yet many of those same consumers say they would watch ads to cut the cost of the service.

It is odd that they would give up something they value so much to save so little.

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