How Much Will Households Spend on Video Streaming?

Are U.S. streaming video subscription customers already showing signs of reaching the limit of willingness to spend on such services? One survey has been interpreted that way. The majority of respondents to a survey (59 percent) are not willing to pay more than $20 a month for any single streaming TV service, according to a recent survey of more than 2,600 U.S. consumers sponsored by The Trade Desk, a supplier of programmatic ad buying. The survey was conducted by YouGov. 

Some 75 percent of consumers indicated they would not pay more than $30 a month for video streaming. A couple of caveats are in order. Consumers taking surveys often casually say they will or will not do something. Those responses often do not match with their actual behavior. 

And, obviously, it is in the business interest of a programmatic ad buying firm to convince wider sections of the market that advertising support is required to reduce overall end user cost.

The money quote: “The survey indicates a willingness from consumers for streaming services supported by ads, particularly if the format and pacing of commercial breaks differ from traditional TV content,” The Trade Desk says.

The issue, as always, is that consumers prefer ad-free formats, but also prefer not to spend too much money on such content. Hence, the delicate balance of revenue models: recurring payment with no ads, recurring payment with some ads or lots of ads but no recurring payments. 

It’s all about perceptions of value, as consumers prefer no ads, but will tolerate them, up to a point, to save money. “Given the choice between getting something for free or paying for the exact same thing, they’ll make the choice to get it for free,” said Randall Rothenberg, Interactive Advertising Bureau CEO. 

“Consumers are willing to view ads if it means their subscription costs go down,” The Trade Desk notes. That tendency can be seen in toleration of advertising across multiple formats and venues.  

It is possible to argue that the willingness to spend responses will prove incorrect. Many of us would be quite comfortable with forecasts that total spending on streaming video could top $40 a month, and for significant numbers of consumers will reach about $80 a month to $100 a month. 

And there are heavy-user households that likely already are spending more than that on total video entertainment (linear plus over the top services). Another survey taken in 2019 already found at least five percent of consumers willing to spend $70 or more on video streaming services per month. 

The other issue is that content is going to fragment onto different services. And some surveys suggest a clear majority of viewers will buy a whole service to see one particular favored show. So no matter what consumers now believe, they will be confronted with a more-fragmented content market that creates new incentives to buy multiple streaming services. 

The point is that it is not unreasonable to expect that most households will not ultimately find they spend much less than they do at present, for video services.