Study: More People Are Watching Ad-Supported Streaming Than Ever; Netflix, YouTube Battle for Viewing Time

No one likes ads, but if it’s a matter of ads or paying more for streaming services, consumers are increasingly more likely to choose ads over shelling out more money. Financially, this makes sense as ads are less of a headache than the increasingly high costs of streaming platforms.

This idea is supported by a new report from the measurement company TVision. In the second half of 2022, time spent viewing ad-supported connected TV (CTV) apps was up 55% over the end of 2020, while time spent viewing subscription video-on-demand (SVOD) CTV apps was down 30% over the same time period.

Other reports have led to similar conclusions. A survey released by DeepIntent in partnership with LG Ads Solutions over the summer found that 64% of CTV watchers “prefer to see ads than pay more for content.”

This is hardly surprising given the rise in ad-supported options over the past year. Netflix and Disney+ both introduced cheaper, ad-supported tiers, and even if some things got off to a slow start, TVision predicts that now that these price-friendly subscription tiers are available, time spent using ad-supported applications will only increase. Additionally, free ad-supported streaming TV (FAST) apps, such as Pluto, Tubi, and Roku Channel, saw significant increases in the time spent viewing, according to the study.

But with all of these options, you’d think that households would be watching more apps than ever. After all, it seems like every other week a new streaming app is being announced, but that’s not the case. While 2022 was a significant year for CTV, the increases in app usage that were evident just a few months ago have now leveled off.

The proportion of CTV-enabled homes has not changed at 83%. Similarly, the number of apps that users actually watch has stayed stable and is significantly lower than it was at its highest point during the pandemic. In the fourth quarter of 2020, households watched an average of 7.7 apps; in Q4 2022, that number dropped to 7.3 apps.

Even though the number of apps we watch has remained steady, that doesn’t mean users equally divide their time among them. With big successes like “Wednesday,” “The Watcher,” “The Sandman,” “Harry & Meghan,” and the blockbuster movie “Glass Onion: A Knives Out Mystery,” Netflix was able to keep viewers interested as the streamer ranked first as the most popular CTV app, followed by YouTube.

It’s also noteworthy that even though Netflix may have brought in more monthly viewers, it no longer leads in terms of time spent viewing. Netflix has officially lost its position as the app where viewers devote the most time to YouTube. The time spent on YouTube has increased by 7% since the first half of 2022, which has contributed to the switch. Meanwhile, Netflix’s percentage of time watched has fallen by 10%, providing YouTube the upper hand.

Most streaming apps — including Netflix and YouTube — saw small, but consistent declines in terms of total household reach, indicating that as viewers become accustomed with their go-to apps, the heyday of CTV content exploration is about to come to an end.