As the cost of living continues to rise, consumers are increasingly mindful of their monthly expenses, including subscription costs for streaming services.
Their reconsideration of streaming services raises questions about the future of television in the digital age and whether the trend of a la carte streaming will give way to a new era of bundled services, where streaming platform Netflix and Disney+ are packaged with other products, from internet services by bandwidth providers in the case of Netflix, or other Disney content and experiences in the case of Disney+, for example.
A recent study by Magnite in Asia Pacific called 'OTT is for Everyone' found that many viewers (67%) prefer to watch free, ad-supported content. In comparison, only 23% prefer to pay for an ad-free experience.
The study's results highlight the explicit acceptance of ads in exchange for free content, with 86% of viewers saying they do not mind watching ads if the ad load is light.
Gavin Buxton, managing director for Asia at Magnite, explains audiences across APAC have embraced streaming video, giving advertisers more opportunities to reach highly engaged audiences at scale.
Due to inflation, he explains, there may be growing sensitivities. So while bundling may be an option that some consumers gravitate towards, there may be more than subscription video-on-demand (SVOD-only) bundling.
"A trend we have seen is that SVOD services are increasingly adding advertising-based video-on-demand (AVOD) options to make their content more affordable and accessible to consumers, and price-conscious consumers will likely opt for that content," Buxton tells Campaign Asia-Pacific.
Chase Buckle, vice president of trends at GWI, points out bundles are not that high on their agenda when speaking to consumers in APAC. In previous surveys, the market research company asked consumers which factors are most important when paying for a TV/film streaming service.
GWI found the prospect of buying a bundle package overshadowed by other factors in the APAC countries it surveyed. Buckle says this means streamers want a lot of choices at a reasonable price.
"They want diversity of content, original content, regularly updated libraries, and foreign content, too, whereas bundles tend to appear at the bottom of the list. But, of course, to some extent, this can be provided by a bundle package," Buckle tells Campaign Asia-Pacific.
"But we must remember that popular shows on streaming services can temporarily dominate the cultural conversation. We saw how Tiger King, Squid Game, House of the Dragon, and many more shows became part of the cultural zeitgeist when aired."
He adds: "Would a fear of missing out on the cultural conversation impact appetite towards more local content libraries offered in a bundle? After all, APAC consumers have a more vocal desire to "fit in" with their peers because they are above all other regions to tell us it's crucial to feel accepted by others. So along with Latin American consumers, people in APAC are more likely to talk about TV shows and films online."
For instance, TV shows and films influence what people talk about and what they buy. Almost 30% of people in India, the Philippines, Japan, and Thailand in GWI's surveys said they typically find new brands and products to buy from the shows they are watching.
"The point is TV and film do not just entertain people. They keep people in tune with the here and now. Restricted content libraries might feel like a significant downgrade if they prevent people from keeping on top of culture," explains Buckle.
Chinese streaming platform iQiyi, which entered the streaming business in 2007 and expanded its territories internationally in 2018, has observed consumer tastes and buying power has evolved over the years.
In November 2022, the platform conducted a pilot study through an online survey to learn more nuances. Among 1,200 respondents from Japan, Malaysia, Singapore, South Korea, Taiwan, and Thailand, iQiyi found 38.3% currently pay for two or more OTT subscriptions to watch TV and films.
"That leads us to a question - if the macro environment didn't push our audience to be more "cost-sensitive", what are consumers' top considerations?" Kelvin Yau, head of Southeast Asia at iQiyi, tells Campaign Asia-Pacific.
"The same survey further finds out that 'variety of content' is on top of their mind while 'affordability' is the third consideration when paying for OTT service. Consumers are seeking more value out of their subscription(s), becoming more 'value-sensitive' instead of looking to pay less."
At the same time, Yau argues making the price cheaper does not mean selling better. As a streaming platform, he says it is iQiyi's job to find the sweet spot of pricing (also involving bundling strategy) vs content offerings that matter to them, adding value to consumers' entertainment options.
For example, iQiyi has partnered with local multimedia networks, like StarHub in Singapore, Astro in Malaysia and TrueID in Thailand, to offer iQiyi content to complement their current services. The platform also explores bundle opportunities beyond the content space and targets entertainment lovers such as cinema.
"In the transitional phase, we need to go dual routes to cover both - the digital natives will still go with our apps because that is how they enjoy entertainment," explains Yau.
"At the same time, a more traditional audience may find it easier to access iQiyi shows via the services they have been using for years."
What is the best approach?
As the cost of living crisis makes consumers reconsider how much they spend on in-home entertainment, Yau says iQiyi is offering incentives that are more than discounts.
The reason is the approach is that the platform feels consumers can always renew the bundles with partners when it's practical and attractive to each other.
"Meanwhile, we offer an in-app incentive feature called "MyPoints" to encourage people to watch content and earn points to redeem as a free membership. And the iQiyi MyPoints can be used across iQiyi and the partner's platforms to create a win-win solution," explains Yau.
According to GWI, around a quarter of TV streamers in five of the 14 APAC markets we studied are considering cancelling a TV subscription, citing that they are already paying for too many services or looking at an alternative provider.
Buckle explains there is a limit to the number of platforms consumers are willing to pay for, and they are more selective when making that decision.
For example, streamers in China and India use around three different providers on average to stream TV and films. That drops to two services on average in Australia, Singapore and Japan. Consumer sensitivity to cost has also not affected demand for TV streaming overall, as the time people in APAC watch online streaming has overtaken traditional TV for the first time.
"Rather than ditch streaming altogether, consumers in APAC are getting more tactical in choosing providers. Between 20-40% in APAC countries are keen to cut back on the number of services they're subscribed to, so loyalty is not in ample supply right now," says Buckle.
"They are ahead of their global counterparts for saying they have subscribed to a streaming service for a show and cancelled after finishing it. They are also far more likely to say they've unsubscribed from a streaming service because the content they liked moved to a different service. The upshot: APAC consumers follow the content. That is where platforms can build loyalty," says Buckle.
"If we look at the data, it indicates that TV streaming services should focus on content to gain a competitive advantage. Their attention should be on content that people are interested in - we can see in the data that when paying for a service, original content and content relevant to consumers' interests are more important than price."
In terms of the content, people are looking for, genres like drama, comedy, and children's TV have proven to be popular among APAC consumers, which points to these being genres that allow escapism during a difficult time.
Local content like Korean dramas and Japanese anime shows are also becoming increasingly popular and breaking into many countries. GWI's data from July 2022 showed that more than half of foreign content viewers globally say they have enjoyed content from other countries and want to see more of it.
Consumers enjoying foreign content could explain Disney+'s strategy to serve up 50 new APAC originals by 2023 and produce more local language content.
Another way streaming services can increase their chances of getting new customers is by letting customers have their subscriptions and potentially new bundles in one place.
For example, Disney has previously run promotions where consumers with a Disney+ subscription can save up to 10–25% on their Disney World hotel stay.
However, Yau cautions the mega app is a dream idea with many layers of operational complexity to overcome.
He points out that no official service can offer such integration of various OTTs in one place, primarily due to the complexity of content copyright issues.
"Different streaming platforms grow in different ways, target different audiences, and operate in different technological ecosystems. So is it truly beneficial to consumers? Yes and no," says Yau.
"We have evolved and outgrew cable TV, the OG of bundle deals. Audiences finally do not need to switch through hundreds of channels to find their favourite shows, but just through a click into the app. But, unfortunately, we don't know if the audience is ever interested in returning to a mega destination and starting over the semi-TV experience again."