The video streaming industry is predicted to grow steadily in the coming years. According to forecasts, the number of viewers and overall revenue will increase. It means that the demand for such services is high. Maybe, it is time for you to create a streaming app and monetize your content.
But the viewers’ demand is changing, and streaming providers need to think outside the box to stay in the game. One of the vital questions is about monetization models in the market. Instead of using one — SVOD, TVOD, or AVOD monetization — platforms started mixing these three, providing more flexibility and convenience to subscribers.
The Situation in the Video Streaming Industry
During the pandemic, the video streaming industry experienced a boom. Many people consume the content of these services at home. It was convenient as video streaming services operated on multiple platforms, including Smart TVs, smartphones, tablets, and computers.
In 2022, Netflix lost about 200,000 subscribers. Generally, the average churn rate was 37% in the USA across all SVOD (subscription-based video-on-demand) services. In the UK, Germany, Brazil, and Japan, the average churn rate was close to 30%.
The market observed the subscription fatigue phenomenon. Viewers had too many subscriptions that required a recurring fee each month. With the return to normal life after the pandemic, people don’t have much time to watch so many services. They started canceling some subscriptions.
The number of video streaming services also grew. They offer various trending content that people want to watch. Consumers have 2-3 subscriptions to different services, but they are more selective — they watch only what they want. So for them it is okay to have Netflix subscription for Stranger Things and NimiTV for Big Brother. They will likely continue switching services based on the hit shows they are viewing right now.
There is also a trend that refers to customer shift to ad-based video monetization platforms with SSAI advertising possibility. Along with this, companies are launching an ad-based tier to reduce churn. People want services they can afford, and video streaming services want revenue.
The free-ad-supported streaming platform Tubi reported growth in viewing and audience for 2022, with 64 million monthly average consumers.
The Adoption of a Hybrid
Recently, Netflix launched an ad-based service at a lower cost than a subscription without advertisements. The company is not the one using a blended approach. For example, Amazon uses all three common monetization models. Viewers need to purchase a subscription to Amazon Prime, but the company still serves ads and offers rentals.
Hulu also has two plans: ad-supported and ad-free. The first one is cheaper than the second one. The company created bundles with other services as well.
Researchers stated that ad-supported subscription-based streaming services will dominate the market by 2028.
The companies are trying to meet viewers’ demand, while customers don’t mind watching ads during video playback. However, the things that they are ready to tolerate today, such as the length of ads, number of ads, and others may change in the coming years. Still, customer satisfaction is crucial for a video streaming platform to stay in the competition.
Despite all this, some researchers predict that the global revenue of subscription-based streaming services will grow from about $75.83 billion in 2022 to around $171.86 billion in 2028. The number of subscribers also will reach 1.9 billion people in 2028.
The video streaming market is growing and evolving. Viewer behavior is also changing, and companies need to meet their preferences to reduce churn, save revenue, and stay in the game.
Now, viewers are switching to ad-based services because they have too many subscriptions. Ad-based streaming services seem to be a win-win for businesses and consumers.