60% of TV Viewers Are 'Ad-Tolerant' if It Lowers Cost, Says TiVo Report

Despite inflation and financial pressure, video entertainment spending is a moderate to high-priority discretionary spend for about 70% of consumers, Xperi reported Thursday, citing results from a Q2 survey of 4,503 U.S. and Canadian consumers. A quarter of respondents said they had cut back on entertainment spending amid rising inflation.

The average number of video services consumers use reached 9.86 in Q2, up from 8.8 in the year-ago quarter, with ad-supported VOD (AVOD) and free ad-supported streaming TV (FAST) services accounting for about a third of video streaming consumption, up from 26% in Q4 2021.

Fewer than a quarter of survey respondents identified as “ad-averse” to the point that they were willing to pay for ad-free plans to avoid watching commercials, the report said. About 60% said they were “ad-tolerant,” and 19% were “ad-favorable.” Interaction with ads grew from Q4 to Q1: 21.7% of consumers said they used their phone to scan a QR code in a TV show or commercial; 22.3% tapped on an interactive ad on a phone or tablet; and 16% tried an interactive game in a video game ad, it said.

While video content is a priority for consumers, “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, for Xperi’s TiVo.

About 80% of consumers said they wanted their paid service to offer a free, ad-supported option, but a quarter of AVOD users said they watch a new AVOD service for only three months before moving on to a new option. Pay-TV subscribers hopped between AVOD services at double the rate of broadband-only users, the report said.

Discovering what to watch remains a top pain point for most streaming TV viewers as content and services continue to grow. Three-fourths with access to voice search use it to help find content, the report said. Some 64% used voice to search for specific programs, 37 used it to change channels, 31% used the feature for browsing for programs, 29% for changing the volume and 27% to launch streaming apps, TiVo said. 17% used voice to get viewing recommendations.

A quarter of respondents identified as “pay-TV revivers,” who previously cut the cord with a traditional linear TV service and then resubscribed. Pay-TV “continues to have a significantly lower churn rate than subscription VOD,” TiVo said. Some 60% of respondents said local content was somewhat or very important, with local weather (68%), news (65%) and sports (36%) at the top. Pay-TV subscribers spend 25% of their viewing time on local content vs. broadband-only subscribers at 16.2%, TiVo said.

Among transactional VOD viewers who purchased or rented content, just over 30% of respondents were Amazon Prime Video subscribers, 13.7% got content from Disney+ Premier Access, 12.1% watched movies and shows on YouTube, 9.3% were Apple TV store/iTunes customers, and 8% bought video content from Google Play. About 5.5% used Redbox Online, and 4.7% ordered Vudu rentals or purchases.

About 30% of survey respondents said they bought a smart TV between Q4 and Q2, and one in five planned to buy a smart TV in the next six months. A low price was the top TV purchase criterion (52%), followed by quality and resolution (48%), brand reputation (40%), good quality audio (36%) and built-in streaming apps (33%).

About 55% of respondents said they preferred watching new movie releases in theaters vs. at home because of cost, with movie tickets under $30, the price of a new release on Disney Plus Premier Access. Fifty-three percent would be interested if the theater had a better screen and sound system; 35% liked theater popcorn and snacks, 23% enjoyed seeing previews, 19% liked the audience experience and 16% said a theater has fewer distractions than viewing at home.