It’s the era of peak TV, and it looks like Netflix is winning the content wars over traditional TV. In its latest annual Conquering Content study [excerpt download page], Hub Entertainment Research finds that TV viewers are becoming pickier about the shows they try, and identify fewer shows as being among their favorites. But here’s the rub: for the first time, those favorite shows are more likely to be found on Netflix than on live TV.
The study notes that video platforms continue to invest in scripted series, with 5% year-over-year growth as of August. However, there are stark differences among platforms, with streaming service providers boosting their original scripted series by 46% and premium cable providers by 42%, whereas basic cable and broadcast providers have cut back. (Last year, IHS Markit detailed a 2.3% compound annual decline in scripted hours in the US from broadcast network and cable over the previous 3 years, with online services instead soaring with a compound annual growth rate of 53% in scripted hours over that time span.)
One of the responses to this golden age of TV, with its abundance of quality content, is an increased selectiveness on the part of viewers. This year 38% of respondents skew towards giving a new show a try only if they’re confident they’re going to like it. That’s up from 34% last year and 30% the year prior. By contrast, just 7% will try a new show even if it only looks slightly interesting, down from 12% last year.
The result of this growing selectiveness is that while viewers are highly engaged with shows, they’re less likely to cite a number of shows as their “favorite,” meant in this regard as shows they make a point never to miss. In this latest edition of the survey, viewers reported an average of 4.4 favorite shows, a figure that’s down from 5 last year and 5.2 the year before.
New Favorite Shows More Likely On Netflix Than Live TV
The highlight finding from the report is that as viewers become increasingly selective, it’s Netflix winning the honors as the premier destination for favorite content.
When respondents were asked about a favorite show they found within the past year, one-third (32%) said they watch the show on Netflix, as opposed to 26% who watch it on live TV.
It’s the first time that Netflix has out-dueled live TV as the destination for a favorite show. Just a few short years ago, in 2014, respondents were more than 3 times as likely to watch their new favorite show on live TV (45%) as on Netflix (14%).
On a broader level, online sources of programming are extending their lead over the set-top box. This year 56% of respondents watch their new favorite show via an online source, versus 44% watching it on a set-top box (live TV, DVR, and/or VOD). Last year’s report was the first time that online sources had edged the set-top box, though live TV had still held the edge over Netflix.
That milestone has now been passed. The news comes amidst strong signs that original content is highly valued by streaming subscribers and research indicating that subscription video-on-demand services’ content quality is more highly rated by viewers than pay-TV.
Original Content More Important For Retention Than Acquisition
Interestingly enough, while there are several studies indicating that streaming video services’ original programming is hugely important, the Hub research suggests that original shows are perhaps more integral to customer retention than acquisition.
For example, 30% of Netflix non-subscribers said that original content makes them more likely to subscribe. By comparison, fully three-quarters of Netflix subscribers said that the platform’s original content makes them more likely to keep their subscription. Similar figures were observed for Hulu subscribers and non-subscribers, while Amazon Prime Video original content seems to be slightly less enticing to its non-subscribers.
Even so, it appears that licensed content remains the key draw for subscription video-on-demand services. More than 6 in 10 subscribers to each of the top 3 streaming services said they would probably or definitely keep their subscription even if the platform stopped offering originals. Fewer than 1 in 10 said they would drop the service.
Research released earlier this year from PwC came to a similar conclusion: original programming was a “very important” influence in the subscription decision for more than one-third (35%) of respondents. Even so, a wide variety of content (37%) appealed to more respondents than access to exclusive content (27%) when selecting streaming services, per the results.
Streaming Content Goes Viral; Legacy TV Depends on Ads
Finally, the Hub research turns up an interesting dichotomy in how people discover their favorite shows. For viewers who watch their favorite show on a set-top box, advertising is by far the leading method of discovery, cited by 54% of respondents, as opposed to 20% who found it via word-of-mouth and/or social media.
The opposite is true for favorite shows watched via OTT sources: a leading 35% share of viewers whose favorite show is watched online say that they discovered it via word-of-mouth or social media, compared to 29% who found it via advertising.
Compared to last year, the results suggest that shows watched on set-top boxes are increasingly being found through advertising, while favorite shows viewed online are increasingly discovered via word-of-mouth or social media.
A study released earlier this year from Nielsen revealed that word-of-mouth is the primary method by which people discover full-length video content, with advertising and social media also highly influential.
About the Data: The Hub Entertainment Research study is based on a survey of 1,699 consumers in the US ages 16-74 who watch at least 1 hour of TV per week and who have broadband at home.