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Ep.9 How Consumers Split Their Dollars, Time Among Streaming Services

In this episode, MediaTalk host Mike Reynolds sits down with S&P Global Market Intelligence Kagan analyst Brian Bacon, who sits on the Consumer Insights team. Together, they talk about how consumers are navigating the ever expanding number of streaming services. While the major streamers like Netflix, Disney+ and Amazon Prime still dominate, viewers also have a growing number of FAST services to choose between. How are streamers differentiating? What are consumers really watching? And, the big question, how many streaming services is too many? Using Kagan's consumer survey data, Brian answers all these questions and more.

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Mike Reynolds: Hi, I'm Mike Reynolds, a senior reporter covering the media industry with S&P Global Market Intelligence, tech, media and telecom news team. Welcome to MediaTalk, a podcast hosted by S&P Global where the news and research staff explore issues in the evolving media landscape.
Today I'm joined by Brian Bacon. He's a research analyst on the Consumer Insights team within the Technology, Media, and Telecommunications group at S&P Global Market Intelligence. How are we doing today, Brian?

Brian Bacon: I'm good, Mike. Thanks for having me.

Reynolds: Appreciate you getting here. What Brian's going to talk about is based on some online survey data and comparatives to earlier periods He's going to share his thoughts and find things pertinent to the u. s Online video world overall as well as some of the specific content genre choices by subscribers to top video-on-demand services like Netflix and Disney+. He's also going to talk a little bit about sports because I love sports. Let's get to it. All right. It's true, Brian, we live in a streaming world.
Where do US households stand in terms of VOD and ad-supported VOD in their homes?

Bacon: Yeah, just about everybody is streaming these days. Results from our fall US survey of 2,500 respondents showed that 83% used at least one subscription video-on-demand or SVOD service, and then 84% use at least one free video-on-demand service. The real question now is how many is too many?

Reynolds: I gotcha. In this house, there are six, seven, eight. Anyway, what are some of the things that stood out in your mind from the survey results?

Bacon: It's just like we've seen in our previous surveys and what a lot of other people following the industry will tell you, the online video space is really fractured right now.
There's content all over the place. It's a bit of a Wild West. I can't even use the term ad-supported VOD anymore because subscription VOD runs ads on it, which gets things pretty blurred. Speaking of SVOD services — Netflix, it's not the only game in town anymore, but they do still have a big advantage. In a lot of cases, Netflix is either the only service that's used in a household or it's the, "I've got Netflix and ..." So sometimes you'll have these big overlaps. Like among users for Warner Bros. Discovery Inc.'s service, Max, 79% of those surveyed said that they also use Netflix.

Reynolds: What are we looking at? You mentioned the ads are everywhere now, the fast channels seem to be popping up weekly, many with dedicated themed content selections.

Bacon: Yeah, on the free VOD side, YouTube LLC is clearly the most used service. But YouTube, it's user-generated content. And so that makes it pretty unfair comparison to go against services like PlutoTV or Tubi. The FAST channels, that's just another way that content is getting diffused across the streaming space. And it seems to me like it's the 21st century version of background TV. By spreading everything out, it's making originals stand out that much more.

Reynolds: Yeah, that makes sense. FAST channels in the background, working on the computer, it all makes sense that way. Going back over the decades, parents and caregivers turned on Nickelodeon/Nick At Nite (US) or Disney Channel (US) or Cartoon Network / Adult Swim (US) or Noggin as a means to entertain and educate their kids. How do things stack up in the online world?

Bacon: It's the same story for children's content as anything else. We're replacing the cable bundle with a bundle of streaming services. So households with children on average use eight online video services compared to only six for households without children. And all the big services have kids content, but Disney+ is still standing out that they've got the youngest user base for the top SVOD services.

Reynolds: That makes sense. I guess you got to keep those young minds occupied and entertained. Online viewing continues to climb, but is there still a significant place for linear?

Bacon: For now, yes. This might sound a bit confusing, so stick with me here. According to the survey, 38% of total daily video viewing hours was linear TV, which is the biggest share. Also, respondents who say that they watch more live TV than on-demand content, they just watch more in general. So on an average day, they view more hours of video. So there's still a place for that linear TV segment where that's what they watch and they tend to watch a lot but with FAST channels making their way onto the scene, that could be something to upset that.

Reynolds: Yeah. Or like me, you just have it on. All day. Anyway, let's take a bit of a deeper dive into some of the content that is resonating for the major VOD services. From what I can gather from the survey data, originals are increasingly the favored form of content.

Bacon: They are. When we ask users about the content they watch and most enjoy on the top SVOD services, originals just keep gaining. It used to be that streamers would turn to Netflix for older TV shows. They'd go to Hulu LLC for current TV, Prime Video for movies and HBO Now for originals. Things have changed. There's a lot more original content out there, and the licensed content is spread out. It seems that users are turning to SVOD services for specific content in a way saying, I need to subscribe to Netflix so that I can watch "Stranger Things" or something like that.

Reynolds: And I guess a lot of people go back and forth depending on the seasonality or when, their favorite show is returning to the air. All right, Brian, let's take a look at Netflix. What do streamers enjoy most there?

Bacon: Yeah, there was a big change for Netflix going from our '22 to '23 results with original TV programs, jumping from 34% up to 51% as the content they most enjoyed. Between those surveys, Netflix did their password crackdown, and now everybody else is doing that for their services, and they also started running ads. And so you take those changes, along with the content trends we've already discussed, and it makes sense to see originals on their way up. It's something that makes the service stand out.

Reynolds: How are things different on Hulu?

Bacon: It's actually a bit of a similar story. Again, going from those '22 to '23 results, the share selecting original TV programs went up from 25% to 41%. So Hulu, which As I said before, was the place you'd go for catch-up TV, keeping up with the current season of TV. That content is starting to get spread out to other places. And it's just a content type. That's really gone down for a lot of the SVOD services as the content that's most enjoyed. So people even on Hulu are turning to original content there.

Reynolds: All right. Amazon Prime Video — how have things stayed or been different over the course?

Bacon: It's an interesting one. Who can turn down free shipping? So a lot of people subscribe to Prime. And it's been kind of something that a lot of people have, the question has been how much have they actually taken advantage of the video portion of that. But it's also an interesting one that they place so much of their content in one space. So there's the ad-supported stuff from Freevee and it's right next to the stuff that's included with Prime. And then there's also the stuff that you can purchase. And so movies were a really popular content type on there. And even things like they've just added all that MGM catalog to it. So it's just a spot where movies are still really holding on.

Reynolds: Interesting. Interesting. You had mentioned Max before. Given HBO's heritage, I'm assuming originals are at or near the top of the dial.

Bacon: Yeah. Like I said before, we first started asking HBO Now users back in 2018 about the content they most enjoyed. And back then it was originals and then the licensed movies that HBO had access to. You start to change things with the introduction of HBO Max. So that brings in some new content. Now it's just called Max — that's not confusing or anything. So that's bringing in even more content. It's a bit interesting that compared to 2022 results, the 2023 results are about the same. So it's holding things steady for the moment. The change with all of the new Discovery content really hasn't shaken things up too much there.

Reynolds: Yeah, I would have thought there might have been some inroads made that way. There's no shortage of fare out of the likes of Food Network (US)HGTV (US)Discovery Channel (US), et al. How about where things stand with Disney+, obviously they've invested a lot of money in originals as well.

Bacon: Yeah. Originals are definitely climbing. But we do have to keep in mind that theaters are back open now. And so the share of respondents that are selecting recent movies as the content they most enjoy on Disney+ has gone down, and that's also impacted some of these other services, but another recurring theme here is that the share selecting network TV, that's going down as well. So as one thing gains, something else needs to be dropping down for these kinds of results.

Reynolds: I think Kagan recently added NBCUniversal Media LLC's Peacock, Paramount Global's Paramount+, and Apple Inc.'s Apple TV to its most recent survey data. What's preening these days on Peacock?

Bacon: Yeah, I'll give you some creativity points for that one. Original TV programs took the largest share at 32%. But network TV is still important to Peacock users with 30% selecting either current or prior seasons. Another one that's a bit interesting here too is that it might be difficult for users to distinguish between originals and the other NBCUniversal content. They might just all lump it in as original. A similar problem has existed with some of these other services, like on Disney+. Do people really recognize what's a Disney exclusive or Disney-made content versus something that's a Disney+ original?

Reynolds: Yeah, that's a good point. I think for some of these media conglomerates, they increasingly are viewing content as content and, "what platform do we put it on first" is one of the things they have to consider. How about Paramount+ how is that resonating?

Bacon: Yeah. I expected things to be about the same as Peacock, especially because I just recently signed up for both of their apps within the past couple of months, and even just scrolling through the apps, they seemed about the same. And they're both trying to leverage content in the same way. Originals took a larger share than compared to on Peacock. So 46% of Paramount+ users selected original TV content as their most enjoyed.

Reynolds: Apple given its content composition, it's not surprising what its secret sauce is.

Bacon: Yeah, it's all about the originals on Apple TV+. That's most of the content that's on there. And the process that Apple's gone for, it really reminds me of what Netflix did when they first ventured into original content — they go after the big names, high concept, it's well made it, it feels that step above. And so it's no surprise that original TV programs are by far the most selected type on there.

Reynolds: We're getting to the end here. What about sports? What have your survey results found? And if you could talk about that for a little bit.

Bacon: Yeah. One last note for the content most enjoyed stuff is that we really do need to add sports because of, the success that like the NFL has had running streaming, exclusive events on Prime Video or on Peacock and then there's all the other sports that are on streaming services. So we're going to have to add that going forward.

Reynolds: Little work for you there, Brian.

Bacon: Yeah, yeah. High level view for sports viewing — it can roughly be broken into thirds. So about a third of respondents said they view sports at least once a week. About a third say they view less than once a week. And then we've got about a third that say they never watch. Now, this question is asking about what the respondent does personally. So someone else in their household could be watching sports.

I think by looking at it this way, it provides some insight into the frustration around sports rights and the rising cost of pay TV. If the lion's share of your cable bill is for stuff that two thirds of people don't even watch once a week, that's bound to cause some friction. The other thing that we should note here is that it's a really exciting time for sports rights. The RSN model is falling apart here. We've got this combination of streaming and broadcast that's seen some success. And so pass the popcorn, this is going to be fun.

Reynolds: Okay.

Bacon: If I could tease one last thing here that we're working on our media census survey is about done being fielded at the time we're recording this and in that we decided to ask respondents about. The leagues that they watch and then specifically the teams that they're a fan of. And so the idea here is to examine the popularity of a team in their market versus out of market teams and how many fans of the local baseball team are also fans of the local basketball team and those sorts of things.
We're a very mobile society. A lot of people are moving around across the country. And, I for one, I don't live in the home market of my favorite baseball team. So that means I got to look outside of the RSN model. That doesn't do me any favors out here. So stuff like that is something that we're going to be looking into.

Reynolds: Yeah, that'd be very cool. And your favorite baseball team, Brian, is?

Bacon: The Diamondbacks. So I'm a bit heartbroken after their loss in the World Series.

Reynolds: I gotcha. All right. We'll look forward to more sports information in the near future. Anyway, this concludes this episode of MediaTalk. I just want to thank Brian for spending a lot of time sharing his views on the online world and their changing position in the video industry. Appreciate it, Brian.

Bacon: Thanks.

Reynolds: All right. This is Mike Reynolds. Thanks to all of you for listening. We'll catch up soon on the next edition of MediaTalk.

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