Ad-Based Video on Demand (AVOD) Services Increase to 32%, TiVo® Video Trends Report Finds

Rhea-AI Summary

Xperi Inc. (NYSE: XPER) reports a significant increase in the average number of video services used by consumers, now at 9.86, up from 8.8 last year. The growth is attributed to the rising popularity of ad-supported video on demand (AVOD) services, which now account for 32% of total video services. Despite inflation, 70% of respondents prioritize video spending, with only 25% cutting back on entertainment expenses. The report also notes a demand for local content and a desire among consumers for ad-supported options in paid services. Options and content discovery remain key challenges for viewers.

Positive

• Average number of video services used increased to 9.86, indicating strong consumer engagement.
• Ad-supported video on demand (AVOD) services now account for 32% of video services, highlighting a consumer trend towards more affordable options.
• 70% of consumers prioritize video entertainment spending despite economic pressures, showing resilience in the market.

Negative

• 24.3% of AVOD users only watch a new service for three months before switching, indicating high churn rates and potential dissatisfaction.
• Finding content remains the top pain point for consumers, complicating user experience.

• Number of Video Services Used by Consumers Continues to Climb
• Consumers continue to prioritize video entertainment, while seeking ways to save money

SAN JOSE, Calif.--(BUSINESS WIRE)-- Research released today from TiVo, a wholly owned subsidiary of entertainment technology company Xperi Inc. (NYSE: XPER), finds that the average number of video services used by consumers is approaching double-digits for the first time in history, up to an average of 9.86 video services from 8.8 a year ago. According to the TiVo Video Trends Report, contributing to the rise is an increase in adoption of ad-supported video on demand (AVOD) services, also referred to as free ad-supported streaming TV (FAST); AVOD services account for 32% of the overall share of video services used by consumers in 2022, compared to 26% in Q4 2021; and the average consumer is now using three ad-based video on demand services.

While consumers’ willingness to pay for ad-free programming has been an advantage to subscription streaming services in recent years, that trend is now giving way to increased adoption of ad-supported video fueled by a proliferation of free content services or introduction of subscription tiers, according to the report. At the same time, a rich-content first experience remains a priority when it comes to discretionary spending. In fact, 7 in 10 of respondents said their video entertainment spending is a moderate to high priority. Despite inflation and financial pressures, only 25% of respondents reported reducing their entertainment spending. Three in 10 consumers surveyed said they had purchased a smart TV between Q4 2021 and Q2 2022.

According to Michael Goodman, Director, TV & Media Strategies, Strategy Analytics, “The results in the TiVo Video Trends Report highlight that while video entertainment remains a priority for the vast majority of consumers, FAST services allow consumers to stretch their entertainment dollar. Giving them additional entertainment options at no additional cost.” Goodman added, “In uncertain economic times this financial flexibility is much appreciated by consumers.”

“Entertainment, and specifically video content, is very much a priority for consumers, but if they can get it at a lower-cost, or free, consumers are demonstrating a growing tolerance for more ads as part of the content they consume,” said Walt Horstman, senior vice president, Monetization, TiVo, a part of Xperi, Inc.

Additional TiVo Video Trend Report Highlights

• Hopping around: 8 in 10 consumers said they wish their paid service offered an ad-supported free option, but a quarter (24.3%) of AVOD users admitted to only spending three months watching a new AVOD service until moving onto a new option. Moreover, pay-TV subscribers admitted to hopping between AVOD services at more than twice the rate of broadband-only users.

• Too many options: Finding what consumers want to watch continues to be the number-one pain point for the vast majority, as services and content proliferate. Voice control is more popular than ever, with three-quarters (74%) of respondents who have access to voice search technology using it to help find content faster.

• In the neighborhood: 59% of survey respondents consider local content to be important or very important, with local weather (68%), news (65%) and sports (36%) topping their list of tune-in priorities. Pay-TV subscribers spend a quarter (24.6%) of their viewing time on local content, while broadband-only subscribers spend 16.2% of their viewing time watching local content.

• Cord-cutters come back: 25% of pay-TV subscribers are reported “Pay-TV Revivers” who once cut the cord and resubscribed. TiVo’s research team points out that pay-TV continues to have a significantly lower churn rate than subscription video on demand (SVOD).

Find more information from the latest Video Trends Report here.

Methodology
Since 2012, TiVo has surveyed consumers to uncover key trends relevant to TV providers, digital publishers, advertisers and consumer electronics manufacturers. The latest TiVo Video Trends Report surveyed 4,503 adults 18 and older living in the US and Canada during the second quarter of 2022 (3,505 US, 998 Canada). In addition to identifying and analyzing key trends in viewing habits, the TiVo Video Trends Report provides insight to consumer opinions regarding Subscription Video on Demand (SVOD), Transactional Video on Demand (TVOD) and Advertising-Based Video on Demand (AVOD) providers, emerging technologies, connected devices, over-the-top (OTT) apps and content discovery features, including personalized recommendations and search.

About TiVo
TiVo brings entertainment together, making it easy to find, watch and enjoy. TiVo serves up the best movies, shows and videos from across live TV, on-demand, streaming services and countless apps, helping people to watch on their terms. For studios, networks and advertisers, TiVo delivers a passionate group of watchers to increase viewership and engagement across all screens. For more information, visit www.tivo.com.

About Xperi Inc.
Xperi invents, develops, and delivers technologies that enable extraordinary experiences. Xperi technologies, delivered via its brands and partnerships (DTS®, HD Radio™, IMAX® Enhanced, TiVo®), and by its startup, Perceive, make entertainment more entertaining, and smart devices smarter. Xperi technologies are integrated into billions of consumer devices, media platforms, and semiconductors worldwide, driving increased value for partners, customers and consumers. For more information, visit www.xperi.com.

Xperi, DTS, IMAX Enhanced, HD Radio, Perceive, TiVo, and their respective logos are trademarks or registered trademarks of affiliated companies and partners of Xperi Inc. in the United States and other countries. All other company, brand and product names may be trademarks or registered trademarks of their respective companies.

XPER- P

View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005384/en/

Xperi Media:

Allyse Sanchez, Xperi

Allyse.sanchez@xperi.com

Source: Xperi Inc

FAQ

What does the TiVo Video Trends Report say about Xperi Inc.'s video services?

The report highlights that the average number of video services used by consumers has increased to 9.86, with a significant rise in ad-supported video on demand (AVOD) services.

How has consumer spending on video services changed according to the report?

Despite inflation, 70% of respondents reported that their spending on video entertainment remains a moderate to high priority, with only 25% reducing their entertainment budget.

What challenges do consumers face with video content according to the TiVo report?

Consumers struggle with finding desired content, which is noted as the number one pain point amidst an increasing number of available services.

What percentage of consumers prefer ad-supported options for paid services?

80% of consumers indicated they wish their paid services offered an ad-supported free option, reflecting a growing trend towards AVOD.

What local content do consumers prioritize in their viewing habits?

59% of respondents consider local content important, with local weather, news, and sports being top priorities.