Streaming in 2022: An Exercise in Cost-Cutting

The cost-of-living crisis is no longer looming on the horizon, it’s here.

For those looking to save money, swapping expensive nights out, for a Netflix night on the sofa, seems an obvious choice. However, subscription services are falling victim to necessary penny pinching, because not only do people have less disposable income, but Streaming Video on Demand (SVOD) platforms have begun putting up their prices.

In some cases, these hikes are simply to ensure subscription fees stay in line with inflation. However, the SVOD industry has matured in recent years, and some platforms have decided to move their focus away from subscriber acquisition and onto profitability. This in itself raises issues, as the cost of content creation is rising, at same time as a global cost-of-living crisis impacts spending. But even so, some SVOD platforms have raised prices in a bid to stem the financial losses they are experiencing as a result of these twin problems.

Are they still entertained?

While SVOD subscription prices may be too expensive, people are still looking for entertainment. Some have even returned to over-the-air (OTA) television – with one US network running a campaign to capitalise on a marked rise in the number of people buying antennas. So, if the number of subscribers who are willing or able to pay for subscription services is dwindling, how will Netflix, Disney+, Prime et al continue to stay afloat? One avenue several platforms are exploring is the Advertising Video on Demand (AVOD) model, where subscription costs are reduced or removed, in lieu of unskippable adverts.

At five to six minutes an hour, the current proposed average length of ad breaks on AVOD models is shorter than the seven to nine allowed on OTA TV. Even so, in less frugal times, many people may still have turned their noses up at the idea of adverts in streaming. Nevertheless, research indicates that 60% of UK subscribers would currently support the addition of adverts if it meant free content, with a similar trend reported in America.

Amazon has already trialled AVOD with FreeVee, one of their streaming platforms. And though they are reluctant to release exact figures, they are reporting that the service is growing in popularity. Perhaps encouraged by this success, Netflix and Disney have announced that they will be following suit and introducing AVOD tiers on their own platforms.

A return to cable bundles

Another alternative to stem the rising cost of subscription prices, is the return of content bundles. Similar in style to those offered by cable companies, subscription bundles pull together multiple SVODs and often include some TV channels.

While not yet very common in the UK, they are returning to popularity in America. Disney+ is already trialling it with their Disney+ Bundle Package, which provides Hulu and ESPN+, and Paramount and HBO are also set to release their own versions.

These bundles, while not customisable, do offer various tiers with differing price points. For example, the lowest tier at Disney+, which simply bundles together subscription services on an AVOD model, costs $13.99. The price rises as you include channels, other subscription services, and return to SVOD, with the top tier costing $75.99 a month.

The future of viewing

Bringing ads to subscription services will take more than the one-size-fits-all approach we’ve seen on OTA television. This is an opportunity for those platforms to personalise their offerings, showing subscribers adverts they will find genuinely valuable. But doing so will require digital media supply chain platforms that are equipped to narrowcast such tailor-made messages.

Regardless, it seems likely that the future of streaming will be multi-tiered, with bundles set to comprise a large part of it. There is already a surplus of streaming services, and bundles offer an increased chance of receiving a slice of the pie. In many ways, it seems as though we may see the return of cable through digital.

The future is bright for streaming, though there is little doubt it will look different to what we’ve become accustomed to.

About the Author

Dan Goman is CEO and founder of Ateliere. Ateliere™ enables creative people and companies to produce and deliver great work everywhere media happens. Digital asset managers, rights holders, and other media supply chain professionals need to store and process a high volume of content at scale—while reducing overall costs. In addition, visibility and control over libraries and workflows are more important than ever. Ateliere is a cloud-native media supply chain management system that meets those needs. Its modular architecture, industry-leading IMF support, and compatibility with other leading technology providers make Ateliere easy to implement, scale and manage.

Featured image: ©Metamorworks

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