Deloitte finds 47% Aussies willing to view advertising for discounted SVOD subscriptions

As broadcasters navigate the digital maze of ad blocking, ad-skipping, and digital privacy, Subscription Video On Demand (SVOD) providers are also looking to diversify business models to supplement subscriptions with advertising and sponsorship revenue streams.

Deloitte has released its tenth edition of the Media Consumer Survey which shows 47% of respondents indicated they would be willing to view advertising on their streaming services in exchange for a 30% discount on their subscription.

The report noted that younger generations are particularly amenable, with 56% of Millennials and 54% of Gen Z willing to expose themselves to commercial messages compared to only 18% of those aged 66 or older, (matures).

However, Deloitte said as free-to-air viewing shifts from live television to Broadcast Video on Demand (BVOD) on devices, particularly for younger generations, “willingness to engage with advertisements may be a challenge”.

The report also found that respondents were not enthusiastic about engaging with advertisements on smartphones (20%) or laptops (12%).

The younger generations are said to be more responsive, likely due to being digital natives. Gen Z is most likely to engage with ads on smartphones (40% of respondents), compared to television (20%) and laptops (20%), and 15% of Gen Z indicated location-based mobile adverts influence them, compared to only 1% of Matures.

The report added that advertising revenue will continue to be a critical revenue stream for both individual services and entertainment ecosystems, providing a valuable supplement to subscriptions. However, striking the right balance in the use of personal data, and targeting the right demographics on the right devices will be critical.

In addition, Deloitte noted that “advertisers must not forget the power of ad-avoidance in driving audiences towards lucrative subscription revenue, for some particularly intolerant audiences, an ad-free alternative to an advertising-heavy offering may be the best subscription acquisition tool”.

The report also showed that free-to-air TV ads remain the strongest to influence buyer decisions, with 17% of respondents indicating they are highly likely to engage with advertising on television.

Deloitte added: “With free to air TV maintaining its dominance in people’s lives and with its expansion into BVOD, there are plenty of opportunities to use this as a driver towards subscription and pay-per-view content to maximise value from audiences.”

“Free-to-air TV remains the overall top home entertainment activity, with 63% of respondents ranking it in their top three most frequent home entertainment activities – up from 51% in 2019. Free-to-air TV was also substantially more popular among all respondents than music (45%), browsing social media (42%) and paid streaming TV/movie services (40%),” Deloitte concluded.

Telsyte’s Australian Subscription Entertainment Study 2021* found SVOD, streaming music and games related subscriptions all experienced strong year-on-year growth (16%, 13% and 13% respectively), driven by the demand for home entertainment and greater acceptance of the subscription model.

Most (78%) Australian households had at least one entertainment subscription at the end of June 2021, an increase from 65% three years earlier. Subscribing households now average of 4.3 entertainment services (up from 2.7 in June 2018), largely driven by SVOD subscriptions.

According to PwC’s latest Australian Entertainment and Media Outlook, SVOD advertising revenues will grow at a 20.4% CAGR through to 2025, with the industry set to be worth US$81.3 billion globally and A$3.3 billion in Australia. NetflixAmazon Prime and Stan expanded their respective offerings in the market, while Binge and BritBox launched in Australia.

Deloitte’s tenth edition of the Media Consumer Survey examines Australian digital entertainment audience preferences. The survey focused on five generations with a sample of more than 2,000 consumers in Australia, and questioned the behaviours, preferences and trends impacting the industry as well as how they may shift in the future.

*The Telsyte methodology for subscriptions is not equivalent to “ viewers”, nor does it provide a measure of utilisation, rather it is a measure of active accounts.


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