Subscription video on demand (SVOD) streaming has officially surpassed cable in television (TV) consumption as of July 2022, according to a recent Nielsen report.
Consumer preferences are shifting, and it’s caused the entertainment market to innovate for a better part of the last decade. In 2013, more than 100 million households paid for cable. In 2020, less than 80 million did, and experts predict that this number will keep falling in the coming years.
Read on to learn more about the rapid growth of streaming and what’s in store for the future of this subscription segment.
Streaming Surpasses Cable in July 2022
Cable usage has been slowing down since 2015, when the percentage of Americans relying on satellite TV or cable services dropped by 20%, according to the Pew Research Center.
This year, SVOD streaming represents nearly 35% of TV consumption, outperforming cable and broadcasting for the first time ever, as reported by Nielsen. Overall, the segment experienced a 22% year-over-year growth.
Netflix alone experienced an 8% increase in viewership due to the company’s release of the newest season of Stranger Things earlier in the year. Other streaming platforms such as Prime Video and Hulu also experienced a combined 6.6% increase in viewing.
SVOD streaming has been growing steadily in recent years, especially after the start of the Covid-19 pandemic. Streaming services are expected to represent close to 40% of the global subscription market, as noted in SUBTA’s 2022 State of Subscription Annual Report.
How New Consumer Preferences Affect the Future of Streaming
Consumers are driven by personalization and convenience, which can’t be accessed when using cable television. Streaming, however, provides both, and it’s enticing customers to want more.
Over 90% of users indicated that they plan on subscribing to more streaming services in the future.
While SVOD services like Netflix or Disney+ are trending upward due to new consumer preferences, other streaming platforms are experiencing great success as well.
As of 2022, nearly a quarter of U.S. consumers digest the news via podcasts, according to Pew Research, and consumption varies per age group.
- Ages 18-29: 33%
- Ages 30-39: 29%
- Ages 50-64: 18%
Close to 80 million U.S. consumers listen to podcasts every week, and the number of monthly listeners is expected to reach 125 million by the end of 2022, according to SUBTA’s 2022 State of Subscription Annual Report.
This trend is empowering media companies to expand their reach by enhancing their offerings. The latest example happened on August 29, when NBC announced the launch of its new offering, Dateline Premium, on Apple Podcasts Subscriptions.
The shift in consumer preferences is an opportunity for entertainment and media businesses to re-imagine their offerings to stand out from the competition.
“Everything that these [streaming] companies do is done with the goal of attracting new subscribers that they didn’t have before, or getting their current ones to continue with their monthly fee. The products that they’re offering will continue to evolve and grow,” said Jon Giegengack, Principal at Hub Entertainment Research and SubSummit 2022 speaker, in an interview with SUBTA.
Streaming Takes the Lead — And Continues to Evolve
There are now several streaming platforms competing for the public’s attention, which is motivating businesses to innovate based on evolving consumer preferences.
On August 26, Bloomberg reported that Netflix is considering prices for its ad-supported tier — that the company announced in June in order to reach audiences it had previously neglected. Users could be charged between $7 to $9 per month, which is roughly half the price of a current monthly Netflix ad-free subscription.
Disney+ is also launching an ad-supported tier on December 8 to “cater to the diverse needs of our viewers and appeal to an even broader audience,” said Kareem Daniel, Chairman of Disney Media & Entertainment Distribution, in the press release.
The idea of implementing an ad-supported tier falls in line with today’s consumer preferences. Nearly 60% of on-demand viewers would rather consume content with ads and save $4-$5 than pay for the ad-free experience, according to data from Hub Entertainment Research shared with SUBTA.
HBO Max and Discovery Plus are also working on expanding their subscriber bases — this time through a merger. The two streaming services will combine their efforts to create a single streaming platform to improve the customer experience and reach Warner Bros. Discovery’s 2025 target of 130 million paying subscribers.
Giegengack noted that streaming services may become an asset for businesses looking to provide even more convenience to customers.
“Look at Amazon and all the different channels (music/photo/shopping) they allow people to bundle together in one subscription. I think we’ll see a lot more of that in the future since people have so many subscriptions now,” he said. “They need a simpler way to manage it all.”
What You Can Learn From the Entertainment Industry If You Operate a Different Kind of Subscription
According to TransUnion, 70% of U.S. consumers who watch both cable TV and streaming platforms believe that there are enough streaming services to replace the need for cable.
In an industry where innovation is key, it’s important to maintain a fresh and valuable offering that fulfill consumers’ needs and preferences. It’s also just as important to focus on the uniqueness of your product/service.
Ensure you “build your subscription around the one thing nobody else is doing,” noted Giegengack at SubSummit 2022.
If you find yourself in a competitive industry, how can you redesign your offering so that your customers’ desires are met and your brand separates itself from the competition?
“The businesses that understand and anticipate the shifts in the marketplace and the new consumer habits will be able to separate themselves from the competition,” SUBTA Co-Founder Christopher said.
Key Takeaways:
- A recent Nielsen report has announced that SVOD streaming has surpassed cable in television consumption as of July 2022.
- The streaming industry is rapidly growing and is predicted to represent nearly 40% of the global subscription market, as noted in SUBTA’s 2022 State of Subscription Annual Report.
- Changing consumer preferences are forcing businesses to reevaluate their offerings.