Rising Subscription Costs Drive Consumers to Ad-based Streaming
Elizabeth Parks
Market Research and Marketing Communications Expert | Thought Leadership | Networking / Brand Visibility for Tech and IoT Markets - Consumer, Small Business, Multifamily
In the early days of streaming, services prioritized building subscriber bases by offering lower price points, ad-free programming, and heavy investment into original content. Today, streaming providers face mounting pressure from rising production, licensing, and distribution costs, as well as increasing demand from investors to demonstrate financial returns. This is coupled with consumers cutting back by canceling subscriptions or switching to ad-supported or free services.
Companies today must not only invest in content but do so while generating profit – a constant challenge:
Larger streaming services like Hulu and Disney+ are raising prices, introducing “paid sharing,” and discretely nudging consumers to paid ad-supported tiers to boost profitability. But this benefits both sides as paid ad-supported tiers generate more revenue than basic subscription tiers without ads and are cheaper for the consumer.?
Meanwhile, niche players, who cater to diverse and underserved audiences, also must adapt – many are looking to ad revenues generated through FAST/AVOD platforms to supplement or even replace their direct-to-consumer (D2C) SVOD apps.
The current streaming landscape is extremely volatile and fiercely competitive. Providers of all sizes strive to innovate, reach more viewers, improve efficiency, deliver in-demand content, and above all, achieve profitability.
Household use of FAST and AVOD streaming services rises to 42%.
Streaming is the dominate delivery method for video entertainment. Alongside growth in the widespread use of paid streaming subscriptions, free ad-based viewing is becoming more common. Demographics for free ad-based OTT users are almost a direct reflection of the demographics of all US internet? households overall.
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SVOD, FAST, and AVOD business models are all key monetization strategies within streaming video. Offering more than one business model is essential in todays streaming landscape, allowing platforms to cater to diverse consumer preferences while maximizing revenue potential.
This is an excerpt from Parks Associates just published research study.
Ad-Based Streaming: Consumer Demand & Engagement addresses the rise of ad-based streaming including both FAST and AVOD services. It analyzes why ad-based services are experiencing a surge in popularity, which services are the most popular, and household sentiment towards the ad-based experience.
Key questions addressed:
Experienced business development, marketing & creative executive
2 个月This still all depends on the content that you want … if it’s Premium entertainment (made by the streamer) and Premium Sport (bought rights) it’s not on any Ad-based offer … even on partial paid with ads … so it’s still content related and what you are prepared to sacrifice or substitute. Ad based or FAST looks like it is reaching over-supply… something will collapse.
Thought Leader in AI and Business Intelligence with customers in 4 continents. Global keynote speaker. Topics: AI and BI for business, Leadership, Digital Transformation, Diversity and Inclusion, Women in Tech
2 个月Great post, Elizabeth Parks Yes, the customer has to be front-and-center of the business model. Streaming services are how media channels, such as Hulu, can stay relevant as the television set competes with phones and Ipads.
Technology Futurist Keynote Speaker, Business Strategist and Disruptive Innovation Expert
2 个月As consumers increasingly move towards more affordable ad-supported tiers, streaming providers are finding innovative ways to adapt, such as by diversifying their monetization models.