Ad-supported streaming services are set to overtake their subscription-based counterparts by 2023.
According to a report by market research firm eMarketer, ad-supported video-on-demand (AVOD) platforms would gain 13.3 million US viewers, including 4.3 million from free premium platforms, this year, bringing their total to 157.1 million.
In contrast, subscription over-the-top (OTT) services will gain just 4.3 million viewers to reach 222.2 million.
Connected TVs will see ad spending hit $25.09 billion this year, as streaming services look to new ad plans and formats to boost profitability, the report said.
“AVOD is the one to watch as streaming services focus on profitability through new ad plans, which are paying off for Netflix, and new ad formats, like those of the newly rebranded Max,” the report wrote.
Ad-Supported Tiers to Find Popularity Amid Rising Cost of Living
As the rising cost of living prompts US adults to cut back on services such as streaming, Netflix has introduced cheaper, ad-supported tiers to attract customers and offset losses.
Netflix has reported a quarter of new subscribers are signing up for its ad-supported tier.
Despite facing increasing competition from new players in the market, Netflix remains dominant according to Q1 2023 data, maintaining its position as the leading streaming platform in the US with a market share of 44.21%.
The company has also seen success with its recently-launched ad-supported streaming tier, which was introduced to attract a greater number of customers and offers a reduced-cost alternative to Netflix’s standard offerings.
Last month, Netflix disclosed that its ad-supported streaming tier, launched last November, has reached nearly five million monthly active users.
I thought it was a poor strategic move, but @netflix ad-supported tier has attracted almost 5 million global monthly active users six months after it first launched.
Note: active users are not the same as subscribers, but nonetheless seems pretty impressive.
— Horacio Rousseau (@horaciorousseau) May 29, 2023
The basic ad-supported plan is currently priced at $7 per month and represents a reduced-cost alternative to Netflix’s standard offerings that start at $10 per month.
Disney to Merge With Hulu as Subscribers Drop 8%
Disney+ and Hulu are set to merge into a single streaming app experience as Disney+ has lost four million subscribers in the first quarter of the year, accounting for an 8% dip in its subscriber base.
One of the main reasons for the substantial loss was a reduction in viewership in India.
Disney+Hotstar, which provides content for audiences in Southeast Asia and India, experienced a drop of 4.6 million paying viewers during the period in question, causing its total subscriber count to fall to 52.9 million.
The company said it plans to become “much more surgical about what it is we make” and “look to reduce content spend” in a bid to streamline its operations and reduce costs.
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