Commentary
Cost, Not Original Programming, Matters Most To SVOD Subcribers
- by Daisy Whitney , Op-Ed Contributor, June 9, 2016
There’s no bottomless appetite for streaming video services after all.
While most of the research on the over-the-top and SVOD markets lately has pointed to robust growth, as well as a near sky’s-the-limit type of potential, a new report from GfK offers a bit of counterbalance, with findings that consumers might have reached their threshold on what they’ll fork over each month for entertainment on-demand.
The research firm reported in a newly released survey of U.S. consumers that Netflix, Amazon Prime and Hulu subscribers already pay at or close to the “maximum monthly fees they feel these services are worth.”
If that data point remains true, GfK says the streaming services may need to consider layering in ads to cover the costs of their original productions and exclusive programming deals, since they might not be able to reach the revenue they need without upping monthly fees.
Apparently, $10 to $11 a month is the most consumers want to shell out for such services, the report found.
That’s due in part to the reasons why they subscribe. Consumers aren’t initially lured by the original or exclusive content that these services often spend millions on.
GfK said programming “not available on any other service” ranks only 9th among reasons that people subscribe, cited by a little less than half. The most important reason consumers sign up for a streaming service is cost, cited by 75% of respondents, while “availability of specific programs” was second at 69%, and the “availability of new movies” was third, at 68%.
Layering in advertising? You wish. Did GfK even offer the response option "avoid advertising" in their survey of reasons people subscribe? Apparently not, so it seems odd to ignore ad avoidance in weighing the costs.
Somehow HBO has prospered all these years without the need to layer in advertising. Many of us consider the absence of commercial interruptions as a key selling point for Netflix and others. Maybe the "layering in" metaphor equates to cake icing for the seller and sludge for the buyer.
A fair point, Douglas. However, if GFK had asked SVOD subscribers if they did so to avoid ads most of them would have said yes, which is the expected answer to such a general question. If, however, they were asked if they would tolerate reasonably short ad breaks---much fewer ads than on TV--- in exchange for subscription prices being kept low, most would probably have said yes to that question as well.