More and more streaming services are jumping on the ad-supported bandwagon. Particularly with tiered options that allow users to choose their own terms:
Free with ads
A small monthly subscription with few ads
A subscription only option with no ads
Hulu has used a model like this for years but when Disney+ rolled out it was all subscription based. When Paramount+ launched, it implemented the tiered option and is seeing great success with active users and overall subscriptions. Recently HBO - a longtime subscriber only network - rolled out an ad-supported hybrid option. Disney+ has announced a similar change to their subscriber models. Why are these networks changing tactics? While it does come back to money - it also has to do with the types of streaming viewers. There are many viewers who look more for value vs. convenience in their streaming services, especially if they stream across many apps. These viewers would rather see a few commercials and have a lower monthly bill. And, networks who only have a pay subscription model are just missing out at this point. Tubi recently provided a report with insight into AVOD (Ad-Supported Video-On-Demand) viewers and it's a great read for digital nerds like us at the Left Hand Agency team. The success of Paramount+ and Pluto TV have laid the groundwork that tiered and free VOD apps are both making money and proving popular. So when Paramount CEO Bob Bakish says the Disney+ announcement is a sign the CBS/Paramount strategy is working, he's taking that to the bank! What this shift in subscription strategy really means for viewers is more content and better content. As streaming companies compete for eyeballs and ad revenue, they will all be forced to up their game. What it means for advertisers is more inventory and better targeting capabilities, which is never a bad thing! If you are interested in chatting about OTT advertising and the streaming landscape, drop us a line!