Tell ’em they’re streaming – how Netflix and Disney+ can benefit from the switch to AVOD
As fragmentation, economic uncertainty and decision fatigue take their toll, viewing behaviours are changing. The options for premium content providers and advertisers are increasing, explains Alex Spurzem.
Ad-supported streaming is getting a lot of attention of late. The announcements of Disney+, and most recently Netflix to enter the fold, could come as early as October for the streaming giant in some markets, says Bloomberg. The move comes against a backdrop of soaring cost of living prices coupled with the fifth consecutive interest rate rise in a row from the RBA this week.
Why should the industry welcome the arrival of new options and how can publishers and advertisers make the most of this opportunity?
Subscription fatigue sets in
Times are tough and getting tougher, and the expense of managing multiple services is beginning to surface. According to Kantar, More than half a million streaming subscriptions were cancelled in Australia in the second quarter this year with 37% citing the need to save money.
The SVOD services are looking at ways to diversify and keep more of their subscribers through ad-funded models and the data from Deloitte’s 2022 Media Trends is clear in other mature broadcast markets, viewers are happy to accept ads if the price of subscription is reduced or free.
It shouldn’t come as any surprise that consumers are willing to watch ads in exchange for free/discounted entertainment in a consolidated viewing ecosystem. According to PricewaterhouseCoopers’ Australian Entertainment and Media Outlook, Australian households are now spending a total of $4,500 a year on internet access, subscription TV, gaming, social gaming, cinema, news media subscriptions and printed newspapers, podcasting, books, magazines, music and live events.
Many have noted that the choice on subscription platforms can be so overwhelming that 49% of consumers spend so long deciding what to watch that they end up watching nothing. It feels like a tipping point that many people may start questioning if they can continue paying for it all.
Experience and budget meeting closer, delivering value
The recent YouTube Brandcast event revealed some interesting shifts in consumer behaviour. Melanie Silva, Google ANZ MD explained how we’ve got more choice than ever, and noted the rise of Connected TV as the fastest growing screen in Australia. But it’s not just the use of the device that’s changing but the content and how it’s delivered as well.
In parallel to subscription video services, free ad-supported streaming TV (FAST) services are gaining traction in the US with both consumers and advertisers alike. FAST mimics the free-to-air TV experience and is structured around an EPG (electronic program guide). It’s not exactly re-inventing the wheel, but this streaming take on the linear format is growing. In 2022, the number of available fast channels in the US is over 1,400, with 22 major providers trying to reach consumers that are re-embracing the notion of simply tuning into a channel in progress for free. Even single show channels, devoted to older hits with a loyal fanbase, such as “Baywatch” are trending.
Speaking with Sam Hall, chief content and commercial officer at Fetch TV. “FAST channels are a valuable addition to the entertainment ecosystem and provide Fetch viewers with another way to access popular content. The Fetch model is about bringing all types of content offerings together in one place, and making it easy for viewers to decide what they want to watch irrespective of the format or provider. We believe that FAST channels present an exciting opportunity for advertisers to reach highly engaged viewers.”
A broader fairytale
While Disney+ may have 152 million subscribers, there are still plans to introduce an ad-funded offering globally by 2023 (or even late 2022). The cheaper option will stand alongside its ad-free offering, expanding access to Disney+ to a broader audience at a lower price point in response to the growing demand for streaming inventory. According to Kareem Daniel, the move “is a win for everyone – consumers, advertisers, and our storytellers. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families.”
The new advertising tier for both Disney+ and global streaming giant Netflix signals their ambitions to drive revenue and streaming market growth.
It’s only a repeat if you’ve seen it
Netflix, one of the world’s biggest streaming services, has been producing original content for close to a decade. Whilst shows such as the Squid Games amassed viewing time of over 1.65 billion total hours within the first 28 days, the most recent seasons of Ozark, The Witcher, and Tiger King, had 95% of their lifetime viewership occurring by day 58 after the premiere.
While big hits are a crucial part of Netflix’s consumer value proposition, the shelf life of content could be extended and monetised with a FAST or discounted model to drive subscriptions.
A New Source of Value
Wallets will struggle to stretch any further and audiences are eager to watch channel-based content that feels like it’s been curated for them. It’s only natural that content creators and advertisers will start meeting them at a new balance point, where budget and experience align.
Alex Spurzem, general manager, Samsung Ads Australia
