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This Could be a Media Game Changer

This Could be a Media Game Changer

By Shane O’Neill, VP

Media advertising is about to get a whole lot more interesting as Disney+ and Netflix are about to introduce ad-supported subscription options. As two of the most dominant streaming services with the highest average customer retention rates, the question is how much of traditional cable ad dollars will move over to Disney+ and Netflix, along with other OTT (over-the-top) services? OTT simply refers to the delivery of content, services, or applications over the internet. OTT streaming also includes the likes of YouTubeTV, HBOMax, and ESPN, and HULU, both a part of the Disney network. This could be a game changer.

Let’s look at viewership
According to Nielsen, ​​the average adult spends 4 hours and 49 minutes watching TV per day. Out of that 2:53 hours are spent watching live TV, although it’s important to note that a majority of live TV time is spent watching sports. But according to Gartner, those aged 18-43 spend an average of 63% of their overall TV viewing time watching via streaming versus cable, broadcast, or satellite. The point is that streaming is growing, in fact, time spent streaming jumped 18% YOY (Nielsen). Admittedly, OTT advertising has had some growing pains, but now with Disney+ and Netflix in the fold, expect the competition for eyeballs to heat up.

Why are Disney+ and Netflix game changers?
With all the streaming options and increasingly exclusive content, users typically have multiple streaming services, which can add up to a nice chunk of change each month. So, maybe it shouldn’t come as a surprise that 57% of people, surveyed by Hub Entertainment Research, said they could tolerate some ads. Disney+ and Netflix already have the highest retention rates among streaming services, so there is some solid consistency, in terms of viewership, that’s important for ad dollar consideration. In addition, with a lower-priced option available, that may not only increase retention but will most likely lead to new subscribers. And we all know subscriber growth is a key KPI for streaming services. Moreover, if additional subscribers are brought in, you can bet that a majority of them will be for the ad-supported option, as traditional subscriptions have started to flatten. Those new subscribers will also, more than likely, consist of 35-year-olds and younger, which would boost bridal age subscribers.

What other advantages do Disney+ and Netflix have?
Compared to traditional cable, broadcast, or satellite, Disney+ and Netflix would rely much less on ad revenue…although you can bet the almighty dollar will win out in the end. However, it won’t be like that to start. In fact, it may lead to a revolution in how ad networks function. One obvious example, which is already true for video ads that run on YouTube, as well as Facebook, is ad length. If you’ve ever sat through a commercial break, where 6+ sets of ads run with an average of around four minutes per break, you’ll understand the pain. So, shortening ad breaks would be a welcome addition and make ad-supported models more palatable to the user. In fact, Hulu has already taken a stance on limiting ad breaks to no more than 90 seconds. Also, since they will most likely make ads non-skippable, limiting ad break times could actually benefit ad recall and overall effectiveness. 90 seconds isn’t long enough for viewers to get up and grab a bowl of ice cream or make a sandwich.

Reinventing ad delivery could also be revolutionary. Since users maintain an account, and even subaccounts/profiles for each family member, the platforms would have access to different types of data, like what type of shows you watch. This could lead to a more personalized and relevant ad experience, especially if the user could select what types of ads they wish to see or even base their ad viewing on interest. Filling out a simple ad profile when signing up for ad-supported subscriptions would be a simple thing to implement.

To take this concept to deeper, imagine viewing ads on Amazon Prime if they offered an ad subscribed model. Since Prime is connected to a user’s Amazon account, how simple would it be to show advertising based on products they use? In particular, as products go on sale…with a click of a button, that ad could turn into an eCommerce conversion. Changing advertising so that it allows more personable levels of engagement and/or introducing new products, based on interests, could usher in a whole new world of relevant and, dare I say, desired advertising. That would turn traditional advertising on its head and ad dollars would surely follow.

Expect both Netflix and Disney+ ad platforms to launch in late 2022 or early 2023.

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