Posted In: Media by
Connor,
February 19, 2024
Steph Feather, Head of Media
Over the last couple of years we’ve seen significant development in the video-on-demand (VOD) industry, across ad-funded VOD (AVOD) and subscription VOD (SVOD) offerings.
In Kantar Media’s recent ‘2024 Media Trends and Predictions’ study, they report on key themes around attitudes to ad-funded models, with consumer media loyalty being tested as inflationary pressures continue.
Despite there being continued global economic troubles and shifts, many VOD platforms have continued to increase subscription prices (with this trend expected to continue) in which Kantar report that the percentage of consumers cancelling their subscription has increased. In the UK market, for example, SVOD cancellations stood at 9.9% in the second quarter of 2022, but by Q3 2023 that figure had risen to 14.2%.
With inflation suppressing media subscription appetite, data sheds light on global trends into how consumers might juggle their spending priorities in light of unexpected costs…
As broadcasters and streaming providers are constantly evolving to keep up with an ever changing market and viewing habits, they will need to react and respond with a recalibrated mix of subscriptions and ad-funded options for consumers.
We’ve seen recent large platform investments from the likes ITV and Channel 4 with their VOD offerings launches of ITVX and 4 Streaming. After a whole year in market, ITVX reported some impressive figures in growth with new and lapsed users, as well as an increase in streaming hours. Their paid for subscription service, ITVX Premium, lets users watch totally ad-free. Of their 21M monthly users the platform reaches every month, users still welcome ad-delivered content even with an ad-free option, with less than 10% of ITVX users paying for Premium.
Amazon Prime have launched a slightly different model (on 5 February 2024), where you’ll be shown adverts when watching films and TV shows on Prime Video unless you pay a new, higher monthly fee (£2.99 bolt-on) as they begin charging for ad-free streaming. An unappealing strategy next to those of Netflix and Disney Plus which launched ad-supported tiers as a lower-cost way to get streaming.
In addition to this, Amazon have also recently struck a landmark deal with Reach Plc, the UK’s largest publisher, to access customer data as it steps up it’s targeting in response to Google’s third-party cookie depreciation.
Why do we care? The agreement, one of the first of its kind in Europe, comes as Google lays plans to kill the cookie later this year, offering advertisers an alternative approach to reach high-value consumers online. Reach will share contextual first-party data with Amazon, meaning advertisers can utilise this data to enhance targeted advertising beyond third-party cookies.
So what’s on the horizon for VOD in 2024? We’ll continue to see a mix of options come to market for subscription based and ad-driven VOD platforms as broadcasters push their digital first focus. AVOD capabilities are set to expand as it gets experimental with formats and functions that offer interactive ads and extended shoppable features that pushes direct to purchase to the fore.
Whilst on-demand viewing continues to gain traction and AVOD delivers cost-effective solutions for advertisers, the allure of linear viewing will remain strong, notably for major events like the 2024 Paris Olympics and political elections. These moments will highlight the communal magic that on-demand streaming often can’t match, and will continue to deliver peak linear viewing.
If you want to chat to our resident experts in media about the media landscape and how it’s evolving drop us a line at hello@weareboutique.
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