Jon Giegengack, Principal and Founder, Hub Entertainment Research, sits down with Tim Siglin, Founding Executive Director, Help Me Stream Research Foundation, and Contributing Editor, Streaming Media, to discuss shifting Streaming Video on Demand (SVOD) strategies in this exclusive interview from Streaming Media East 2023.
Siglin starts the conversation by asking Giegengack to describe what Hub Entertainment Research does.
“I started it in 2013, and it’s a consumer research company,” Giegengack says. “We do about 50,000 consumer surveys a year on everything to do with how people find and choose and consume entertainment content…so, TV, movies, music, games, but TV and video is our specialty. It’s probably about 75% of our work.”
How Netflix Changed Audience Tolerance Levels for Streaming Advertising
Siglin mentions that his organization, Help Me Stream Research Foundation, has released the seventh edition of their State of Streaming survey, where they ask the industry what they serve. He says they have noticed a slowdown in Free Ad-Supported Television (FAST) deployments, despite the recent consensus that customers can better tolerate advertising. He asks Giegengack for his thoughts about what is really happening around audience acceptance of streaming advertising platforms and tiers.
Giegengack says that over the last few years, the massive popularity of Netflix essentially conditioned people to believe that the era of TV advertising was over. “In reality, that’s never really been the case, but it’s especially not the case now [with] connected TV interfaces and as streaming TV supported by ads makes the experience a lot different from what people are used to when you think about the old days of linear TV. So the ad loads are smaller, and oftentimes the ads are targeted to you, which is actually something that people welcome,” he says. “Some of the ad-supported platforms have content that you can’t see anywhere else. We’ve found that the largest segment of consumers are willing to use or even prefer ad-supported platforms if they need to use them to watch a particular show that they want to see. And they’re even more tolerant if, by using an ad-supported platform, they can save some money. So we’re seeing that part of the equation get more important as folks are squeezed a little bit by inflation.”
Siglin asks, “On the serving side, we see a flat line of subscriptions without ads that stayed constant for the last three and a half years. But subscriptions with ads as a portion of revenue have dropped off considerably. Is that because what’s being made on ads is less for the content distributor? Or is it because people are moving back towards subscriptions without ads or toward FAST, where they’re not paying for it?”
Giegengack says Hub finds that about a third of consumers are gravitating more towards platforms that provide a choice of ad-free or ad-tier options. “Giving people that choice means no one has to compromise,” he says. For strictly FAST channels, he notes that while that sector has grown significantly in recent years, growth has stalled this year at around 60%. “One thing that might make it less attractive if you’re a provider is that there are so many FAST channels out there now,” he says. “Trying to have yours sort of break through the clutter can be difficult.”
“And to make a pun,” Siglin says, “if you weren’t fast to the market in the early days, you’re just like everybody else at this point.”
The Importance of Niche Content for FAST Channels
“I think you have to have something that isn’t just as easily found elsewhere,” Giegengack says. “Some of the really niche FASTs have a good shot…they’re not going to be huge, but they can be successful for what they are because they’re offering [unique] things. But if you’re sort of a middle of the road and you’re offering scripted dramas, and you have cool originals, but so does every other platform, it might be a little bit of a haul to get folks to try yours when there are other ones, that at least on the face of them, look exactly the same to consumers that are inundated with these things and don’t have a great ability to tell them apart.”
The State of SVOD Subscriptions
Siglin asks Giegengack about the current state of SVOD subscription levels. “Has that number stayed constant over the last couple of years? Or has it been dropping?”
“It went up yearly from 2013 through 2022,” Giegengack says. “In 2023, it went from seven and a half TV sources – not just SVOD subscriptions, but all sources – back down to 6.4. This is a pretty big drop, but it’s still the second-highest number that we’ve ever seen since we started the company. So we’re not at the 52-week high anymore, but at about a 50-week high.”
Siglin asks how often Hub conducts this research, and Giegengack says they do so around ten times a year.
The Benefits of Licensing Out Exclusive SVOD Content to FAST Channels
Siglin notes that many significant streamers could keep subscribers by creating exclusive content and gatekeeping it on their platforms. While this was enough to keep churn down in previous years, he wonders if shows such as Amazon’s The Marvelous Mrs. Maisel, which has lasted years on the platform but is now ending, can be further monetized via syndication on other platforms.
Giegengack says this is already happening and cites HBO’s Westworld as an example. “They’re going to be licensing it out to FAST platforms,” he says. “All these companies need to make that content budget they have. They need to stretch it because it’s getting more constricted now. In 2020, 60% of the top five shows were released with all episodes simultaneously. In 2022, 65% will be released once a week. And the reason for that is economics. If everybody hoovers up all eight episodes in a week, then they’re looking for the next thing. If you can string that out over a longer period of time, you’re getting more mileage. But the funny thing is that consumers actually don’t really mind. People still want to binge view sometimes, but luckily there’s still a lot of [back] catalog shows that they can binge. And people are kind of rediscovering the fun of anticipating Sunday night when The Last of Us comes out.”
“The water cooler effect,” Siglin says. He notes that the younger generations who have been conditioned on binging are now actually surprised when a show’s entire season is not available. It will take a re-conditioning back to old-fashioned scheduled linear programming.
Giegengack says that “creating scarcity” with programming releases is now essential because of the anticipation and buzz that it generates. “I bet you it’ll be more of a kind of a cultural phenomenon that we used to see all the time with TV shows,” he says.
“I think there also might be a model that says, ‘Let’s release it at a particular time on a day as well,’” Siglin says. “So while we won’t call it prime time, say I’m Disney or one of the big companies, and I realize maybe I’m going to release it in a semi-non-peak time that happens to hit closer to prime time. Because then it becomes an experience everybody can have at one time versus having to watch it at, you know, midnight.”
Giegengack says that Nielsen’s data support the benefits of this approach. “There was a stat that shows the day of the week that the new episodes are dropped, and as more series have gone to that episodic release, there’s also a lot more distribution. And I think there are people [where] it will be jarring from what they’re used to, but there’s no way around it. That ‘acquire subscribers at any cost no matter how much we have to spend on new shows’ [model] was never really sustainable.”
Learn more about FAST, AVOD, and SVOD at Streaming Media Connect 2023.
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