Will the growth of ad-supported subscriptions revitalise the streaming market?
17 May 2022
The Walt Disney Company announced in March this year that they would be introducing an ad-supported subscription offering to their Disney+ streaming service in late 2022 / early 2023. Disney is not the first streaming service to offer this, with HBO Max, Peacock and Hulu already offering ad-supported subscription options to their users. Kareem Daniel, Chairman of Disney Media and Entertainment, has said that their decision to do this will make the streaming service more accessible to “a broader audience” who will be able to access Disney+ “at a lower price point”. Nerdist reported in April that Netflix is due to follow the same path later this year, with further details yet to be confirmed. Although not a new concept, this shift leaves the market questioning if this will affect subscriber sign up.
The Current Market
According to an article by Fortune Business Insight, the video streaming market is expected to grow from $473.39 billion in 2022 to $1,690.35 billion in 2029, a CAGR of 19.9%. Despite this, services like Netflix have reported a loss of 200,000 subscribers in Q1 this year and it is predicted to increase to 2 million by the end of Q2. This may be a result of Netflix increasing the price of their current plans, and perhaps the loss in subscribers has been a driver to the introduction of ad-supported subscription packages.
The streaming market is becoming more competitive, making it difficult to attract new users to a streaming service claims eMarketer, “Streaming services are more expensive than they’ve ever been”, thus making ad-based subscriptions more appealing to both the target audience and mobile content creators because the potentially cheaper subscriptions could lead to more subscribers with ads leading to additional revenue. A potential win-win for both parties.
Streaming has greatly benefitted from the global pandemic. PWC reported an increase of 75% in the time we spent streaming movies and shows during 2020. It’s undeniable that spending more time at home led to more people watching shows on various streaming platforms. However, the market is seeing a growing reluctance for customers to add new services or pay more, possibly due to the increased cost of living we’re seeing across the globe, leading to stagnation. Users are looking for more value, meaning that content producers must continually strive to improve services and offer more in their services.
Ad-supported subscriptions are a potential solution to this. Content creators can provide the same services at a cheaper price, whilst adding to revenue through partnerships with relevant advertisers. Lower priced subscriptions will make streaming platforms more attractive in the marketplace and will ideally help improve retention, as well as encourage new customers. However, this is not a new concept as Fortune Business Insight reports that advertisement based streaming already has the largest market share.
How is this an Opportunity for Carrier Billing?
The addition of more ad-based subscription services will offer a significant opportunity for streaming platforms as they will attract a wider audience with lower price points. Customers will require convenient and secure payment options to subscribe which carrier billing can offer. This will be particularly successful in markets with low credit/debit card penetration, with customers looking for alternative payment methods.
Offering more affordable price plans will allow streaming services to be more competitive, especially in markets where they are experiencing tough competition.
Carrier billing offers consumers a secure, hassle-free payment method to pay for services via their mobile number, allowing for easy payment of their subscriptions. With carrier billing, streaming services could reduce time to market with simple API integration and increase revenues. If you would like to find out more contact the SLA Digital Team today.