The pandemic cemented and accelerated the worldwide shift to streaming, and it initiated a resurgence in the advertising market across the range of streaming platforms. Despite a dip since the height of global lockdown, the market remains strong. The majority of American homes—52%, according to Ampere Analysis—have three or more streaming subscriptions, and more than a quarter of households (29%) have five or more services.
High demand for exclusive and original programming has pumped up costs to a level that means most streaming services will not be profitable for several years. According to S&P Global Market Intelligence, even Disney+ is not expecting to be profitable until FY2024. To that end, expect to see more subscription video-on-demand (SVOD) services rolling out ad-supported tiers, as HBO Max did in June 2021. Meanwhile, the lack of an authoritative and consistent metric spanning the range of CTV platforms continues to brake ad spend on digital.
Here's the global perspective, summed up by Ampere Analysis co-founder and director Guy Bisson: “We're at the stage where most households have multiple paid streaming [services] and multiple ad-supported streaming services that all these distinctions between AVOD, SVOD, linear, BVOD [broadcast video on demand], and FAST [free ad-supported TV] are irrelevant. As far as the consumer is concerned, it's all television. So, at that point, we just need to call it TV. The migration is a tech shift, not a business or economic shift.”
Combating OTT Customer Churn
According to a report from Deloitte Insights, the volume of content choice, the ease of canceling, and a desire to manage cost means that SVOD churn will be as high as 30% in 2022. With content costs also at all-time highs—Disney+ plans to spend $33 billion in 2022—major streamers need to adapt their business models, market to market, to keep in the game….