Consumers Welcome Bundles, Ad-Supported Plans as a Way to Shrink Bills
Consumers Welcome Bundles, Ad-Supported Plans as a Way to Shrink Bills
‘Streamflation’ continues to be a pressure on entertainment budgets, but cord-cutting from pay-TV continues according to a new TiVo survey.
We’ve officially entered October, which means two major entertainment companies are set to raise their subscription prices. Disney is hiking rates on nearly all services and bundles on Oct. 17 and DIRECTV STREAM is set to increase the cost of its packages beginning on Oct. 6. Viewers continue to have to pay more to access new streaming services, and a new survey from TiVo shows how customers are battling back against “Streamflation.”
Key Details:
- Pay-TV subscribers are paying $30 less per year on average for services, but broadband-only customers are still spending more.
- Around 64% of respondents said they were using ad-supported tiers as a way to cut costs.
- Over 60% of customers said they were more likely to keep a broadband plan if it had bundled streaming services.
TiVo’s new Video Trends report took a deep dive into customer behavior in an environment of rising costs and attempts to combat those costs through consolidation. More cohesion is certainly needed, as its survey found that as of the second quarter of 2024, 73% of viewers reported needing to browse multiple apps to find something to watch, and nearly 85% said they looked at their phone to pick something new first.
The number of services that customers use on average to find video is continuing to fall and now stands at 9.1 per household, down from 10.9 in the second quarter of 2023. Pay-TV customers are continuing to spend less on average, cutting their monthly outlay on video from $208.54 to $170.86 in the past year. However, broadband-only customers who don’t have linear cable or satellite are continuing to see their monthly spending creep upwards.
To combat rising costs, viewers are consistently turning to ad-supported plans to lower their spending each month. About 64% of respondents said they used at least one ad plan while streaming, and 61.7% said they used an ad-supported subscription service or free ad-supported TV (FAST) platform.
Bundles are another way customers are combating the rising cost of subscription streaming. Twenty percent of TiVo’s survey participants said they subscribe to the Disney Bundle, and 61.7% of respondents who are considering a switch in broadband providers say they’re more likely to keep their current plan if it includes on-demand streaming access at no additional cost.
“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,” TiVo’s parent company Xperi’s VP Scott Maddux said. “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.”
Pay-TV Declines Settling?
There was one note of good news for cable providers in the TiVo survey, as the number of customers who plan to cut the cord in the next six months has dropped from 27% to 19.6% year-over-year. There are various reasons viewers plan to stick by their cable plan, but a fear that they won’t find all of the entertainment that they want without some sort of pay-TV plan is at the top of the list.
However, fewer people are going back to cable once they’ve left it. The number of customers returning to a pay-TV plan after having cut the cord dropped from 28.3% in Q2 2023 to 22% in the same quarter of 2024. More than half (53%) of customers who say they plan to cut the cord in the near future say they’ll turn to a live TV streaming service instead.
As streaming providers hone in on their profit margins, customers are undeniably feeling a squeeze. Most are turning to ad-supported plans and increasingly available bundles to help solve these woes, but some viewers are leery about turning their backs on pay-TV packages that deliver a reliably huge amount of entertainment, despite the costs.
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