Survey: Cord-Cutters Dropping Streaming Services; Free TV Market Shows Resilience Amidst Economic Uncertainty
The worst of the inflation that gripped world markets in 2022 has passed, but those forces undeniably had their effects on consumer spending habits. Customers the world over were more careful with their budgets last year, as the price of essential goods rose at a rate much faster than wages, and that caution is carrying over into 2023.
Those conditions have led to a pullback in the number of sources people use to get video, according to a new survey from Hub Entertainment Research. After showing strong growth — doubling between 2019 and 2022, from 3.7 to 7.4 — the average number of TV sources used by viewers has dropped in 2023 to 6.4. This decrease from 7.4 to 6.4 represents a relative decline of 14%. Although the causes for the drop are varied, it is likely that inflation and perceptions about the economy, combined with the heavy saturation of the streaming marketplace that are most to blame.
Subscription video streaming services were one of the main video sources that saw a decline in users last year. The number of viewers with a subscription video-on-demand (SVOD) service like Netflix or Disney+ dipped from 89% to 82%. Cable and satellite users also saw a decline, as the portion of respondents to Hub’s survey who said they used a pay-TV service dropped from 62% to 55%. Free ad-supported TV (FAST) essentially remained steady, showing a one-percent dip from 58% to 57%.
The biggest streamers in the market are suffering just as much as the smaller ones. Hub’s data shows that in 2022, half of respondents reported three or more subscriptions to the “Big 5” SVODs — Netflix, Disney+, Hulu, Prime Video, and HBO Max; in 2023, that number has dropped to 42%.
“Booms don’t last forever, and inflation and economic worries may have finally slowed the roll of consumers looking to stack traditional and streaming subscription TV services,” Hub senior consultant David Tice said. “However, FASTs have maintained their momentum this year; in a time of economic uncertainty, ‘free’ is a powerful differentiator.”
FAST channels are an easy way for providers to generate revenue through advertising dollars, and the price point clearly appeals to consumers. They offer a coveted “lean-back” viewing experience that allows users to passively watch without missing anything of consequence or having to start the next episode of a show manually. Those factors have led to an explosion of FAST channels in the United States in the last year, and the total count across all streaming platforms is now over 1,500.
Companies are taking notice of the growing popularity of the FAST space, as well. The live TV streaming service Sling TV recently launched a hub of FAST channels called Sling Freestream, which people can access whether they subscribe to Sling or not. Google has also stepped up its offerings of FAST channels on Google TV-powered devices, as the company recently added more than 800 FAST networks from Plex, Tubi and Haystack News to its “Live” tab.
The domestic streaming market is about as saturated as it can be, which means streamers have to look to other global markets to find more customers moving forward. Aggregation and bundling will help mitigate ongoing concerns about inflation if streamers continue to offer multiple services together for a lower price, but Hub’s data shows that FAST channels are the stickiest video form in an economic environment that is perceived to be unstable.