Until this point, companies like Netflix have primarily gone down one lane — either SVOD or AVOD; Subscription-based or Advertisement-based video-on-demand business models. As we move into the future past the midpoint of 2022, streaming services are considering multi-pronged business models. Whitely predicts that as the share of consumers’ wallets becomes more challenging for new and existing streaming services to launch and sustain without a lot of subscriber churn, they’ll have to explore enabling ad-supported streaming models in addition to subscription-based models.
That’s not to say that we’ll start seeing a ton of ads in addition to hefty subscription fees. Consumer pushback should keep that in check to some degree. After all, people usually pay for a service to get something in return, whether ad-free or premium content. If a streaming service is charging too high of a subscriber fee while also receiving a bunch of ad revenue, trying to dip too far into “the best of both worlds,” Consumers aren’t going to continue using their service. If they can balance subscription fees with ad-based content, it bodes better for both the longevity of the streaming service and the customer value of using their services.
An important point to touch on is that Consumers are concerned with each added streaming service, we’re returning to the “old way” of visual media consumption — cable television — that we’ve only just left behind.
Whitely believes the old model was a good value for the industry and consumer. The problem was that channel bundling contained a lot of content people didn’t consume. Through SVOD and AVOD, we’re achieving channel bundling in a way that works better for the consumer experience and the industry. Channels that people aren’t consuming won’t last because people won’t spend money on channels they won’t consume.
You can see this with live viewing genres like sports that have heavy viewers that support the whole industry now with streaming services. In the old way, paid-cable, many people had sports networks they never really consumed. Many streaming services are finding this model challenging, to now be supported only by heavy viewers instead of also receiving the revenue from passive subscribers like cable television channel bundling.
Sports isn’t the only live viewing genre, and live is still very important. As people watch more Video on Demand content, consumers have fewer shared viewing experiences. Other live viewing events, like the Oscars and Emmys, are seeing a renewed level of interest they haven’t enjoyed in years as a consumer response to SVOD and AVOD services experimenting more with live programming. Over the next few years, we’ll likely experience a continued industry and consumer trend of more live streaming events, and people can share the experience in real-time. Live isn’t going anywhere, and we’re likely to see the trend continue growing in the next few years. Streaming services that can offer the type of live content, such as sports, news, and other live events that pay-cable does, in addition to their library of content, present a very compelling proposition to the consumer experience.
Gaming is one of the newer additions to streaming, with services like Game Pass and others that are becoming a more compelling value for consumers. While we’ve not yet seen considerable consumer interest in joining the Metaverse, either through gaming or other avenues, heavy gamers will likely lead the way for more casual gamers in the years to come. It might not be in the next few years, but Metaverse adoption by a wide section of media consumers is likely to grow in the coming decades.