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Topline data from HUB Research’s November 2018 report, “Conquering Content: Why Viewers Discover and Choose Some Content Over Others,” provides some insights on contemporary viewing preferences, particularly regarding SVOD subscriptions. The report is based on an October 2018 survey of 1,699 U.S. consumers aged 16-74 who watch at least one hour of television per week and have broadband (the sample was balanced to U.S. census data).
The full report discusses “how consumers navigate the ever-growing deluge of TV programming: how they first hear about shows, how their discovery sources differ by genre, the characteristics of a show that make them most likely to give it a try, and even the number of episodes they’ll watch before deciding if a show is good enough to add to their regular viewing schedule…the discovery methods consumers use, the study also looks at how they feel about the process: how easy or difficult it is to find shows to watch, the discovery tools that are most and least effective, and how their feelings have trended over time.” All of this sounds very interesting; however, the data available to the public only hints at this wealth of information.
For instance, according to the HUB’s research, the sheer amount of programming now available to consumers through the networks, cable channels and SVOD has led to viewer fatigue and a relative degree of unwillingness to waste time on shows that may only be of slight interest. Currently, 38% of HUB’s respondents said, “I’ll give a new show a try only if I’m confident I’m going to like it,” up 27% over 2016, while only 7% said “I’ll give a new show a try even if it looks only slightly interesting,” down 42% since 2016. Additionally, the average number of claimed favorite shows (shows you make a point never to miss) was 4.4 in 2018, down from 5.2 in 2016. Clearly the vast array of programming options has made viewers more selective about which shows they will watch.
Perhaps the most eye-catching finding regarded the importance of original content. Much is made of the original content on Amazon, Netflix, and Hulu, but HUB’s findings suggest that while these programs may be buzz-worthy, they aren’t crucial to viewers. When non-subscribers were asked, “Do originals make you more likely to sign up for streaming subscription?” only 22% of respondents said this made them “a lot or a little likely” to subscribe to Amazon, while the percentage was 30% for Netflix. Yet when subscribers were whether “originals make you more likely to keep your subscription,” 73-75% agreed. It would seem that originals don’t pull in new subscribers (a surprising point to us) but they are important for retaining current customers.
That said, a final data point muddies the water. Respondents were asked, “Would you keep your service if there were no originals?” The answer was fairly consistent; 69% of Hulu subscribers, 64% of Amazon subscribers and 61% of Netflix subscribers said that they would keep the service. So, subscribers like to have the original programming, but it’s the licensed content—programs originally aired on networks and cable channels both in the U.S. and abroad, movies, etc.—that have the most pull. And the variations are reflective of each SVOD provider; Hulu is better known for its network and cable programming, while Amazon and Netflix both showcase larger amounts of original programming, as well as a wide array of international options. As time passes, we may see a greater divergence in SVOD services as they focus on specific types of programming that differentiate themselves from their competitors.
The iab’s half-year 2018 and Q2 Internet Advertising Revenue Report, while focused primarily on ad revenues, also provides some interesting insights on the relative health of traditional media. The iab reported 23% digital ad revenue growth for half-year 2018 from half-year 2017 (from $40.3 billion to $49.5 billion). In contrast, Nielsen reported a 3% gain for traditional media in the same time period. By medium, the findings were presented as follows (digital figures are the iab; traditional media are from Nielsen):
Clearly, the picture is bleak for print media in particular, with magazines and newspapers down dramatically. It’s worth noting, however, that Nielsen does not include internet revenue in its tallies, which would undoubtedly improve the numbers for print. TV, on the other hand, is holding its own against digital, with broadcast and cable garnering half-year revenues of $41.2 billion.
What’s the takeaway from this? First, a substantial proportion of digital media revenue comes from direct response ads, while TV ads are deployed for branding purposes; advertisers aren’t pulling branding dollars and putting them into direct response, so the two function without cutting into each other. However, advertisers are shifting branding ad dollars to digital video, which performs the same function as it does on TV. But what we’re seeing isn’t advertisers shifting their branding spend from TV, rather it’s coming from their magazine spend. Whether magazines can counteract this (creating digital content seems to be the current approach) remains to be seen.