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Category: Insights

What If Netflix and Disney+ Launched an Ad-Supported Streaming Service and No One Came?

The OG ad-supported subscription service Hulu has had an ad-supported option from the day it launched back in 2007. It only added the ad-free option later on, in 2015. Meaning they were starting from 100 percent ad supported and working their way down.

Netflix and Disney, on the other hand, are starting at zero and working their way up. They are going to have to convince people to either come on board for the ad-supported service or to switch.

Neither will be an easy task per TV[R]EV’s Alan Wolk.

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US SVOD revenues set to plateau from 2024

The world’s most mature SVOD market, the US, is set to show very much signs of its maturity with revenue growth to be almost flat from 2024 to 2027 due to price competition and lower ARPUs from Netflix’s imminent hybrid AVOD-SVOD tier says a study from Digital TV Research.

The report also calculates that Netflix will have 63 million subscribers by 2027 – down by 4 million on 2021. Hulu, Disney+, HBO and Paramount+ will each boast 40-50 million subscribers by 2027.

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Is It Time For Streaming Video To Play Moneyball?

Hollywood is finally stumbling into the Moneyball era of streaming video. It’s time, especially now that Netflix has corrected course, and Wall Street is finally looking beyond dumb old stat lines like subscriber additions. 

Average revenue per user is starting to matter, but so too is a useful questioning of one of the internet’s long-held beliefs, in the Long Tail. Everything has an audience, somewhere, the Long Tail suggests. Making everything you have available and find-able can build big audiences out of lots of little niche ones. Zaslav begs to differ, and perhaps others will start to do so, too. 

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Netflix’s ad-supported plan could cost as low as $7

Netflix’s upcoming ad-supported plan could cost anywhere from $7 to $9 per month according to Bloomberg. For comparison, the streaming service offers a basic single-screen plan in the U.S. for $9.99 per month, while its most popular plan, which offers full HD streaming on two screens, costs $15.99 per month.

The report noted that Netflix plans to show roughly four minutes of commercials for an hour of programming, which is on par or less than its competitors. It also said that the company might show ads before and during a show, but won’t show anything after an episode ends.

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Are big SVOD hits necessary for growth?

The value of a hit show was clear when traditional live TV ruled home entertainment. It was a simple battle for eyeballs. Big audiences drove higher ad values and even higher ad revenues. In the on-demand world of SVOD, the equation is not that simple, and it is not even clear that a certified hit is necessary at all.

Yet services continue to plow huge amounts of money into creating hits for their streaming services. Amazon is reported to have spent $715 million, or $58 million per episode, for the first season of Lord of the Rings: The Rings of Power. Netflix paid $30 million an episode for the fourth season of Stranger Things, and HBO paid $20 million an episode for House of the Dragon. Why are top SVODs willing to spend so much for big titles, and are they necessary for survival?

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Why Disney+ and Netflix plans for targeting kids with ads may be different, yet the same

Between the two platforms, right out of the gate Disney+ seems more prepared to monetize its kids’ content in a COPPA-compliant way than Netflix. But both platforms are facing similar challenges in entering AVOD, and both will likely choose to focus first on monetizing content outside of COPPA’s realm. Sure, that means both will be leaving money on the table from its kids’ content. But that’s less of a sacrifice than ponying up for COPPA fines and dealing with reputational damage among advertisers – which no company can afford.

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Nearly 60% of Americans Now Stream Video Daily on Smart Phones, Tablets and Computers

The latest data from Leichtman Research Group and its “Emerging Video Services” report finds that 59% of the 1,900 adult U.S. consumers it surveyed in June and July report daily video usage on “non-TV devices” — mainly smartphones, tablets and computers.

“While non-TV devices provide the ability to watch video anywhere, the most common location for watching video on non-TV devices continues to be in the home,“ LRG principal Bruce Leichtman said. “Eighty-two percent of those who watch video on a mobile phone, and 85% of those who watch video on a tablet or eReader, do so at home.”

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What if streamers adopted an ad revenue-sharing model for original programming?

Why not broaden the economic model a bit more by co-opting the rev-share model for original programming as digital video platforms have done? The streamers would pay a certain amount of money upfront to help pay for a project’s production, the producing company would cover the remainder, and then both sides would make back their money by splitting the revenue from ads running against the show or movie. 

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Cable TV Is Back … Sort of

Back when there were just three big streaming services (Netflix, Hulu and Amazon Prime Video) it was easy enough to manage them along with a cable subscription, especially since most consumers don’t seem to view Amazon as a video service they are paying for, but rather an additional perk of a free two-day delivery service.

But now that we’re up to eight mega-SVOD services, people are feeling overwhelmed. They don’t like having to go to Google to figure out which service that new Kaley Cuoco show about the flight attendant is on. Or remembering which six months free offer is about to expire. Or feeling compelled to only watch original series every time they turn on the TV.

Hence the desire for simplicity, for a return to something that looks and feels a lot like the old cable TV system, only without all the bad parts.

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