This is more against making sVoD attractive to people on a budget, versus paying for addition media content for consumers looking for better content from a sVoD service. Both Disney and Netflix are trying to appeal to both types of subscribers.Classic move: introduce a service with an attractive price point, then raise its price once the service is established.
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Will Free Ad-Based Streaming Replace Broadcast TV?
Free Ad-Supported TV (FAST) has become the focus of streaming services and studios. More channels are being added to free linear “live TV” services like Pluto, Tubi, Xumo, PLEX, Roku Channel, and others. Established stream-on-demand services like Netflix, Disney+, and Warner Bros. Discovery are...
During the pandemic, the number of streaming users and subscribers peaked as people looked for ways to stay entertained at home. But as the pandemic receded, people looked outside their homes to socialize, and churn was higher than ever when people dropped their subscriptions. Many opted for the classic, nostalgic programming available on the FAST linear live TV channels.
It could worsen as the economy causes users to tighten their belts and drop more subscriptions. Viewers subscribe to an average of five services and may look for ways to reduce their monthly fees. Netflix lost 200,000 subscribers in the first quarter of 2022.
As user numbers drop, streaming companies have announced cutbacks in original programming, with fewer titles in the pipeline for the near future. It’s a catch-22, though. While they need to save money by producing less, they also need the originals to attract and maintain subscribers. The solution lies in bringing in more revenue.
Traditional streaming services like Netflix and Disney + are working out plans to raise more than a billion dollars each by appealing to users who don’t want to pay the rising subscription fees (the Netflix 4K rate is nearing $20 per month). Both companies will offer streaming with commercials. The revenue raised from ad sales will more than make up for the lower subscription fees. Commercial tolerant users view the content for less per month, and streaming services make money from both subscriptions and ads.
It’s not just Netflix and Disney+. The MoffetNathanson research firm projects that ad-supported tiers will also increase profits for Hulu, HBO Max, discovery+ (now Warner Bros. Discovery), and Peacock. In the future, these inexpensive subscription tiers could be the key to the success of streaming services.
As streaming services begin adopting a model that looks more like traditional broadcast TV, how will this affect linear broadcast TV channels? According to research firm Omdia, 2021 may be the last year linear TV is watched more than streaming and other video-on-demand content.
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