Some Thoughts on Streaming

Whenever I want you, all I have to do is stream.

The world of home entertainment has changed rapidly as technology has advanced, especially in the last five years. In its infancy, a Blockbuster Video rental competitor start-up called Netflix used to put movies in the mail starting late in the last century (1997). The first movie ever shipped was Beetlejuice (I’m only saying it once), and the initial rental cost was just 50 cents. Netflix streaming came online in 2007, offering six hours of streaming a month for around $7. The very last Netflix DVD-containing envelope was mailed out in September 2023…yes, this year!!!

According to a Stirista research article, 46% of all US households watch TV via streaming utilizing a connected device, be it Roku, Firestick, Smart TV, or individual apps like Sling, Tubi, Pluto TV or YouTube TV just to name a few. No antenna, no cable. They are projecting that by 2026, people will spend more hours streaming entertainment than watching live programs on linear TV in real time.

The July 2023 Nielsen numbers show streaming, which overtook cable last July (2022) by .4 of a point, now leads cable viewing time by a whopping 9.1 percentage points (38.7% vs. 29.6%). Broadcast TV ranks 3^rd with just 20% of total viewership time. So today, Linear TV chalks up a combined 49.6% of viewing vs. Streaming’s 38.7%. The remaining 11.6% that aren’t streaming or doing linear TV? Their number is attributed to video game console usage.

You may be thinking, if current growth trends continue for streaming, it could overtake linear TV in 2024, well ahead of initial estimates of 2026, right? Well, let’s point something out here…the numbers we are comparing are July ‘22 to July ‘23. What DOESN’T influence broadcast and cable watching numbers in July? That’s right, football is linear TV’s game saver…so far, anyway. But who knows? With ad-supported streaming app options coming in at a discount, plus bundling of app services, streaming options are working hard to add customers to fill their subscription coffers. That NFL Sunday Ticket on YouTube TV is going to take another bite out of linear too.

Who will be the next streaming service to ‘bundle’ up to battle broadcast and cable subscribers?

Our CMOco office staff has a broad age demographic representation. So, I wanted to do an informal poll about the streaming services they subscribe to, the one they each watch most and feel they get the most value out of, and how they access linear TV programming, for something like the local news. Plus, a cost comparison that I wasn’t expecting…more on that later.

Here’s how the paid streaming services rank based on subscriptions of CMOco employees:

1. Netflix – 83%
2. (tie) Disney+ – (ad supported) 66%
   (tie) Prime Video – 66%
   (tie) Hulu (ad supported) – 66%
3. (tie) Paramount+ (ad supported) – 50%
   (tie) ESPN+ (ad supported) – 50%
   (tie) YouTube TV – 50%
4. Max – 33% (Formerly HBO Max)
5. Peacock – 17% (ad supported)

July 2023 Nielsen data reveals the top watched streaming services nationwide as:

1. YouTube TV –  9.2%
2. Netflix –  8.5%
3. Hulu  –  3.6%
4. Prime Video. –  3.4%
5. Disney+  –  2.0%
6. Max  –  1.4%
7. Tubi  –  1.4%
8. Peacock  –  1.1%
9. Roku Channel  –  1.1%
10. Paramount+  –  1.0%

Interesting discoveries:

• 50% of the staff spend the most time watching, and get the most bang for their buck, from ad-free Netflix, with 33% gravitating toward Hulu programming
• Most staff are utilizing the ‘Disney Bundle’, which teams ad supported Disney+, Hulu and ESPN+ as one lower priced package (A strategy that is working!)
• Only 17% of staff are Cable subscribers. 50% access linear TV programming via YouTube TV. 33% don’t subscribe to any linear TV source (all the youngest office demographic)
• The monthly entertainment spend ranged from a high of $110.46 (5 app subscriptions + YouTube TV) to $34.47 (3 app subscriptions, no linear TV option) (taxes, fees, internet service and equipment rental not included)

Now, the surprise this author wasn’t expecting…

One of the big movements that began about 15 years ago was to ‘cut the cord’, meaning to drop Cable TV altogether for a streaming option. At the time, streaming was just getting underway via clunky Roku and Fire TV options, and many found that they could save hundreds of dollars a year. One of the factors that really helped cord-cutting catch on was the ’08 economic crash, making people scramble to find cost savings anywhere they could. In those times, cable companies found new footing with expanded services, first offering broadband via modem in 1996, the conduit required for any streaming service. So, for many, what was saved in cable-cutting costs was scooped up by streaming companies as they snagged new subscribers with original award-winning content, beloved library shows and movies, along with cable companies providing the broadband speeds needed to stream. Most streamers still likely assume in cutting the cord that they’re still saving $50-$100 a month or more. And in their specific case they may be…but our informal office research result here begs to differ…

One person in the office has five streaming apps and YouTube TV (85 channels). Another has five streaming apps (albeit not the exact same 5 streaming apps) and Cable TV (125 channels). The cost difference: $.51 cents a month, the YouTube TV subscriber pays more. A $6.12 difference over a year. Now, the streamer likely doesn’t have to pay multiple access fees, equipment rentals, etc. that cable subscribers do, so this is not a true end-pay comparison, but still…seeing very similar services and little base price differentiation was quite eye-opening.

While this was a quite informal poll, there are take-aways as consumers…

• App subscription expenses can add up like calories at the salad bar
• There are multiple ways to access similar entertainment; bundle (and budget) accordingly to get what you want
• Streaming is still gaining steam in older demos, since younger demos grew up with it and tap other means to access news and information that isn’t linear TV
• To save money, consider ad supported app options. You’ll save 35-50% per month each, and the commercial load is still minimal (so far) compared to broadcast or cable commercial break lengths

So, as a business owner who markets on TV, what’s it all mean? If you’re not doing streaming ads via OTT (Over-The-Top), the numbers speak for themselves. It’s likely time to do a budget analysis and see how you can be where your customers are and continue to migrate en masse.

At CMOco, we’re happy to help you maximize your presence and impact in all Television and Streaming options. Give us a call today!

– Bruce Thiem, CMOco Director of Integrated Media