Cover Story
Straitened economic times have led to established streaming services introducing or considering ad-supported tiers , and a burgeoning FAST segment . Colin Mann sought the advice of a range of industry players on the implications for platforms and advertisers .
As to whether difficult economic times lead to churn on subscriptions and an uptick for advertising supported services , Marco Di Giacomo , CMO , Amagi , says that while it ’ s very possible that macroeconomics could further accelerate a demand for ad supported services , it is clear that this shift was already in motion . “ Consider the broader macro trend surrounding consumer views on SVoD . Consumers are widely reporting growing subscription fatigue and an increased interest in shifting to ad-supported services . We conducted a consumer survey in October 2022 across 600 households in the UK that showed 33 per cent of consumers would give up TV subscriptions as a cost-cutting measure and 77 per cent would switch from SVoD to Free Ad-supported Streaming TV ( FAST ).”
Guy Bisson , executive director at Ampere Analysis says : “ The ad industry reacts very quickly ; the subscription business reacts much more slowly . It ’ s less of an issue than it was in the days of traditional pay-TV contracts given how easy it is to churn off streaming services . The launch of ad tiers is clearly a churn protection measure , as much as it ’ s anything else . Giving an option to churn down , rather than churn off a platform is a classic pay-TV strategy from the old days .”
“ It ’ s the start of the transition of free TV to streaming . I would argue that the pay-TV business has largely made that
“ We won ’ t think about AVoD , BVoD , FAST . We ’ ll simply think about free TV that happens to be streamed .” – Guy Bisson , Ampere
14 EUROMEDIA transition . From a consumer perspective , when people think about paying for television , they are generally thinking about paying for Netflix , Amazon and Disney . That psychological , as well as practical shift to steaming , has occurred for the subscription business . It hasn ’ t occurred to the same extent for the free TV business . We ’ re now well on that pathway . Going forward , we will no longer think about AVoD , BVoD , FAST . We ’ ll simply think about free TV that happens to be streamed . Business models will all realign around free and pay ,” he predicts . CHOICE . “ Ad-supported streaming has always been an appealing choice for consumers ,” suggests Jason Friedlander , head of product marketing , media platform , Edgio . “ OTT platforms have realised they can offset churn and attract new viewers by providing free – or more affordable – service tiers .”
“ It is no secret that SVoD declined in 2022 ,” admits Katy Dodman , managing partner , Finecast . “ Research conducted at the end of last year revealed 20 per cent of SVoD customers in the UK considered cancelling their subscription , regarding subscription services as a luxury they could no longer afford . In times of economic uncertainty , people seek ways to cut their expenses and save money . Turning to AVoD or hybrid platforms is undoubtedly one of these ,” she adds . “ We ’ re going to see an acceleration in advertisingsupported services in the same way the pandemic amplified trends that were already forming ,” predicts Rob Gambino , head of advertising and personalization strategy at Harmonic . “ There is obvious
subscription fatigue happening with the fragmentation of streaming services over the past few years , and with the price of everything going up , viewers are pickier about what they spend their money on .” UNCERTAINTY . “ Over the last three years – whether pandemic-related or not – we ’ ve seen lots of cord-cutting , with content providers finally catching up to consumer preferences and launching ad-supported services ,” notes Blair Robertson , CTO , InnovidXP . “ And as economic uncertainty looms over the world , we can expect to see a steady trend here as consumers aim to keep costs low .”
“ We ’ ve found that economic concerns at the household-level lead to increased price sensitivity . For connected television , this has led to an increase in adoption for ad-supported streaming services ,” advises Ed Wale , VP , Europe , LG Ad Solutions . “ Consumers don ’ t want to cut their streaming services altogether , so they are willing to move to an ad-supported tier or a FAST channel to keep streaming . Data from a recent study we conducted called The Big Shift shows that 30 per cent of consumers have removed a subscription CTV service from the household in the last 12 months while 25 per cent have added a free ad-supported CTV service during that time .”
Sam Wilson , MD of CTV , EMEA at Magnite , notes that the company ’ s latest report , Streaming TV ’ s New Era , found that the most common response to economic challenges is that consumers will shift towards ad-supported streaming services . “ This research found that 76 per cent of consumers said they would use a new free or reduced cost ad-based streaming service this year . There is , therefore , a strong opportunity for providers of ad-supported services - as well as advertisers - to make the most of , as consumers