New research examines important role of content in driving subscriptions and the user experience

New OTT research from Parks Associates finds that viewers who favor at least one particular type or genre of video content spend 70% of their viewing time on average on services with a broad variety of content, such as Netflix, Tubi, or AMC+. Specifically, 44% spend 76% or more of their OTT viewing time on broad-based services, while 48% spend 25% or less on niche services. The firm’s Quantified Consumer: Content Preferences in OTT Video, with data from a survey of more than 5,000 US broadband households, examines the critical role of content in driving subscriptions and usage, including consumer interest in different types of content and connections between content and the user experience.

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“Services offering a variety of content categories are the foundation of consumers’ video service ensembles,” said Paul Erickson, Senior Analyst, Parks Associates. “Many niche services have been successful, including those dedicated to horror, religious, children’s, and anime content, and niche services such as ESPN+, Britbox, and Crunchyroll make up an important part of the service ecosystem. However, they are unlikely to be the primary, foundational content source within a household.”

Ad-based OTT services in particular have broadened their market appeal over the past few years by incorporating different genre categories. Crackle has made significant additions to its nonfiction content, Pluto TV has added several sports channels, and Tubi TV highlights children’s programming with its “Tubi Kids” section.

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“If services are to challenge the ‘Big 3’ OTT services (Netflix, Amazon, Hulu), they need to feature a variety of programming across genres,” Erickson said. “We will see more bundling services emerge like AMC, which bundled together its niche services Shudder, Sundance Now, and IFC Films under the AMC+ service umbrella in order to give viewers more options.”

The research also finds that while “content is king,” cost is still the leading factor when consumers choose an OTT service. Fifty percent of viewers cite service cost as a key determination in the services that they use to access online video content. In response, key services have experimented with diversified pricing options. Disney+ has introduced transactional purchases, while Peacock is using a freemium model and HBO Max and Paramount+ offer less expensive ad-supported tiers.

“A hybrid pricing approach meets consumers where they are,” Erickson said. “Maximizing revenue potential with hybrid pricing will help services finance the growing cost of content library growth.”

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