Streaming bundling gains traction as viewers cut back, TiVo study finds

Consumers are adjusting their entertainment habits in response to industry changes and economic pressures, according to TiVo’s Q2 “2024 Video Trends Report.” The report indicates a clear trend toward bundled services, as many consumers prefer this option over increasing subscription fees.

Entertainment consumption surged during the pandemic, but now consumers are scaling back. Spending on entertainment has dropped by $30 year-over-year, and the average number of services used has decreased from 10.9 in 2023 to 9.1 in 2024. Despite these cuts, the report notes that overall viewing habits remain consistent. This suggests that while budgets may be tighter, consumers are finding ways to maintain access to entertainment through alternatives like ad-supported services.

A notable shift is that 64% of consumers now use ad-supported subscription video-on-demand (AVOD) tiers, a 16-point increase from the previous year.

“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.”

The report highlights that major media companies are responding by bundling AVOD and free ad-supported streaming TV (FAST) services with their traditional SVOD offerings. This approach is becoming a successful business model, reducing churn and helping customers consolidate their services.

Additionally, broadband providers offering streaming bundles benefit, with 62% of respondents stating they would likely keep their internet service if it included additional streaming services. As a result, the bundling of broadband and streaming services is emerging as a key strategy in the evolving entertainment market.

Consumers are also becoming more tolerant of ads, as long as they feel they are getting good value. The quality of ads on AVOD and FAST platforms has improved, making the experience more acceptable for viewers. This shift in consumer behavior shows that with the right balance, bundled ad-supported services are gaining wider acceptance.

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• 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.
• The relevance of content recommendations has decreased 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%).
• 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.
• 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.