Exclusive, high-quality and critically acclaimed content has been a key factor in the success of subscription-based video on demand (SVOD) services since their inception. Funded by monthly subscriptions, millions of Americans watch series such as “Stranger Things” and “The Crown” by Netflix and “Obi-Wan Kenobi” by Disney+, acquired programs like “NCIS” on Netflix and “Friends” on HBO, and movies like “Jurassic World: Dominion” on Apple TV.
Until now, this content not only differentiated SVOD suppliers from competitors, but gave them a leg up on free, advertising-based video on demand (AVOD) services who have historically relied on licensed shows and content. This is significantly changing as AVOD services cut into the market share of SVOD.
The volume of original shows produced by AVOD services increased nearly 400% from Q1 2020 to Q1 2022. Roku is the leading supplier of original shows (“Billions” and “First Lady”), among these services, with Crackle, Pluto (owned by Paramount), Tubi (owned by Fox), and Freevee (owned by Amazon) following suit.
Advertisers favoring SVOD services will be losing out on key audiences found through AVOD services. A major missed consideration is the volume of subscribers opting out of ad-supported accounts. Increasing subscription pricing and removal of shared accounts on similar services, especially amid growing economic uncertainty, have left users hesitant to rely solely on these streaming services. For the first time in a decade, Netflix reported their first subscriber loss in Q1 2022, with a loss nearly five times as large in Q2 (nearly 1MM subscribers). In response, they plan to adjust their business model with an ad-supported tier, expected early 2023. As evidenced by the moves of Netflix, Hulu, Disney+, and many others, we’re on the forefront of subscription fatigue and with that, a greater attraction to and reliance upon, AVOD services.
As changes in streaming services and viewership continue, you can look to the digital media pros at Brkthru to watch and share the latest developments. Just like the (streaming) TV news, we’re on it 24/7.